Good afternoon, and thanks for joining us for our first quarter 2022 earnings call. I'm pleased to be joined today by Co-founder, Chair, and CEO, Tony Xu, and CFO, Prabir Adarkar. We'd like to remind everyone that we'll be making forward-looking statements during this call, including our expectations of our business, financial position, and operating performance, future results and guidance, our investment approach, strategy, and statements regarding our acquisition of Wolt. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those described in forward-looking statements, and some such risks are described in our risk factors, including in our SEC filings, including Form 10-Ks and 10-Qs. 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 IR 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 IR website. An audio replay of the call will be available on our site shortly after the call ends. As in previous quarters, we'll go straight into the Q&A portion. With that, operator, please take the first question. At this time, if you would like to ask a question, please press star one on your telephone keypad. Your first question comes from the line of Ross Sandler from Barclays. Your line is open. Hey, Tony, Prabir. I just had one high level and then one kinda more near term. In the letter, I really liked how you laid out the philosophy around investing proceeds from the US restaurant profit pools into these new areas with precision. I think some folks on the line here are a little worried that after Wolt closes, you know, and that philosophy holds up, you're just gonna have a lot more areas by which you can reinvest those profit pools, you know, across all of Europe. Can you just maybe just talk about how that philosophy might change post-Wolt? The second question is, based on the revenue margin and the overall commentary on take rate, looks like you're having no problems navigating supply and fuel inflation. Doesn't seem to be an issue, but any noticeable changes from all the inflation out there on Dasher cost per order, either kind of in the first quarter or anything we should expect looking ahead? Thanks a lot. Hey, Ross. It's Tony. I'll take the first one, and I'll let Prabir take the second one. On the first one, well, you know, I would say two parts. You know, first is just our investment strategy with Wolt, and then secondly, just our investment philosophy in general. You know, our aspiration is to build the largest global local commerce business, and we wanna do that by building two assets. We wanna build the largest local commerce marketplace, where we're bringing everything inside the neighborhood to you, and we also wanna build the largest local commerce platform, where we're giving tools to the physical businesses so that they each can become their own digital powerhouses. That's really why, you know, we're excited about teaming up with Wolt because they share that same vision to build that truly global local commerce business as well. You know, from our perspective, it's really gonna take a similar investment philosophy in terms of how we've built everything else. In the investment shareholder letter, we gave an example of how we built, you know, effectively a new business from scratch in the last couple of years that in the convenience category and kind of outlined, you know, how we always start by first making sure that we build the best product possible, especially measured in terms of retention and order frequency. We have a maniacal focus on the unit math to get the unit economics to work, and then we start considering efficient ways to actually scale that business. While we are aggressive in how we run these experiments to be able to, you know, achieve those input outcomes, we're very disciplined about how we think about how to scale these businesses, and it's gonna be no different as we think about the opportunity to team up with Wolt. We think the opportunity obviously is immense. I mean, if you look at, you know, this opportunity globally in the restaurants category, you know, in the U.S., we're, even as the market leader, only 6% of total restaurant industry sales. If you extend that into these other categories of restaurants or convenience or retail, we're a significantly smaller percentage. If we add in, you know, the countries now that Wolt adds on top of that, which gets us to a combined portfolio of about 26 countries, we're almost an, you know, unnoticeable percentage. If you add on top of that the digitization that's happening, you know, on the merchants' websites and apps themselves, many of which we power through products like DoorDash drive or Storefront as well as other products, we're in the earliest innings. The investment philosophy remains the same, where there's a maniacal focus on building the best-in-class products, a maniacal focus on getting Laser sharp on the unit math so that that's actually positive before we, you know, scale globally. Yeah. Hey, Ross, just to add to that point before I move on to the second part of your question. If you recall, when we announced Wolt, one of the things that we were excited about was their unit economics and their retention. Wolt gives us a more efficient engine through which we can invest internationally. That's why what we had communicated was, you know, even after integrating Wolt, we expect our EBITDA expectations for the year to be materially unchanged because we're essentially now redeploying capital that we would have deployed, but through the Wolt engine, which is actually more efficient. Hopefully that gets to the crux of your question. On your supply question, we have not experienced supply shortages, and we feel good about our supply position looking ahead. Some stats to share with you. Our Dasher costs as a percentage of our GOV were lower both quarter-over-quarter and year-over-year. Recall, if you recall, last year in Q1, we were undersupplied due to bad weather as well as fiscal stimulus. We began investing, you know, over the course of last year as well as this quarter, frankly, to continue to build a supply base so that we can address the demand that we had anticipated. The second point, this is a little bit of a nuanced one. You know, our batch rates are down both quarter-over-quarter and year-over-year. The reason I point to that is because in some occasions, if we find ourselves undersupplied, you may see batch rates go up. As a matter of fact, we actually had lower batch rates today than we were a year ago or even last quarter. Then the last point I'll make is, you know, our costs to acquire new Dashers. Our cost to acquire every new Dasher that is the lowest it's been in the last four quarters. You know, all that to say, you know, we feel really good from a supply standpoint, not just because we invested in advance in order to address this demand, but because, you know, we don't compete with rideshare for Dashers. This is a completely different pool of people. Operator, next question. Your next. Okay. Your next question comes from Youssef Squali from Truist Securities. Your line is open. Great. Thank you very much. Hi, guys. Just a couple of questions for me. One, I know you haven't closed on Wolt yet, but considering their geographic footprint, et cetera, can you maybe just talk about how that business has performed, just given the war headwinds, et cetera, and how has it been tracking relative to your own growth? In the letter, Tony, you guys continue to see opportunities to increase contribution margin as a percentage of marketplace GOV in the U.S. marketplace, I think. Just, can you just help us think through how much higher can these get over time, say, over the next year or two, as you need that money to invest in all these new initiatives that you've highlighted in the letter? Thank you. Thanks for the question, Youssef. On the Wolt question specifically, the deal is on track to close in the second quarter. We can't comment on Wolt's performance before the deal is closed, but in connection with the closing of the transaction, we'll provide more detail when we come back to the Street with specifics. Stay tuned for that. Now, on your question around U.S. contribution margins, we haven't disclosed the exact contribution margin in the U.S. restaurant business. Let me try to answer your question in sort of qualitative terms, which is the first thing is we have, you know, driven increasing margins in our U.S. restaurant business while growing category share. The reason that's important is because it's easy to do one or the other, which is either grow margins or grow category share, but what's remarkable is the progress that we've made in actually growing both. In looking into the future, there's multiple levers that are available to continue doing so without hurting growth. First, as we continue to drive up the efficiency of the logistics network, that will help our margin structure in the U.S. Second, as we continue improving the quality of the delivery experience, that will help with customer support costs as well as refunds. Finally, there's leverage in certain parts of cost of sales as well as sales and marketing, which will help the margin structure. Now, beyond this, as our ads business scales, this is an incremental tailwind to the margin structure. All of these things will come together to help the margins for the US restaurant business grow and fund not just other things, but reinvestment in the core US restaurant business. Because we're not running the US restaurant business to harvest margins. We're still investing in US restaurants in order to build scale and continue to grow category share. Great. Thanks for the color, Prabir. Your next question comes from the line of Steven Fox from Fox Advisors. Your line is open. Hi, good afternoon. I was just wondering, since you mentioned the unit economic changes on the convenience business and some of the other categories you're going into, can you compare and contrast those sort of unit economic curves, you know, looking at maybe using the U.S. restaurants as a baseline and how maybe some of these new categories could be different as you sort of reach, you know, some ideal scale? Thank you. Yeah. I mean, you have to remember that it's like comparing a two-year-old to a 10-year-old, so it's kind of hard to compare them apple- to- apple. I'll say that, you know, in a matter of two years, given that we've got line of sight to at least break even unit economics in our 3P convenience business, it's quite remarkable. You need to pair that with the fact that, you know, we are number one in the convenience space, and this is just in a matter of two years. Over time, there's things that we will do to continue driving up those margins. You know, I don't want to provide a forecast to where the margin structure gets to because you've got to walk, crawl, run, and we're right now at the walk stage. We're getting to breakeven, and then in the future, we'll continue driving up margins. Today, the vast majority of the margin comes from the U.S. restaurant business. Other areas are sort of, you know, margin consumers, so to speak. Over time, as they hit maturity, you'll start to see us generate more and more profits from those other areas. Great. That's helpful. Thank you. Your next question comes from the line of Lloyd Walmsley from UBS. Your line is open. Great. I have two. First, kind of sticking to the unit economic question, you know, in the letter, you talked about convenience looking to generate a positive variable profit in the second half. Can you just help us contextualize that in the, you know, is this a big flip over the last, you know, year or so? And you know, what is actually what you see driving that flip to variable profit contribution in the second half? Then the second one, there were some press reports about slowing hiring at DoorDash recently. You know, is this accurate? Can you talk about what you're seeing causing you to slow hiring or maybe just shifting priorities ahead of Wolt? Anything you could share there would be great. Thanks. Great. Maybe I'll take the first, and Tony can take the second, Lloyd. You know, on the question around 3P convenience, you have to remember when we started this category, we knew there was demand for it because we saw what consumers were searching for, right? That demand got further amplified by COVID. What we didn't completely appreciate was exactly how different and unique this area was compared to restaurants. That's the learning curve we've been on that has now gone to the other side of as we turn the curve in profitability. Simple things like, you know, our dashers need to go into stores to pick and pack. We need, you know, a different way to understand the inventory position inside the store and how do you guide the Dasher when they're inside the store. You know, the basket sizes tend to be lower. This is where our operational and sort of execution focus and product focus muscle really shone because it allowed us to take this problem that looked unique relative to restaurants and actually create products around it in order to make the math work even with lower basket sizes and picking and packing requirements. That's what I'd say. Now, there's certainly a lot more we can do in terms of further cart upsells as well as other things, including advertising attach, by the way, to drive up the unit economics. We're super early given that it's only two years old. Yeah. I think, you know, the only other thing I'd add before I take the question, Lloyd, on hiring is just. I think it's important to realize, especially when you're talking about the immense opportunity in something, you know, like convenience or grocery, you know, which is hundreds of billions of dollars, you know, more than a trillion-dollar opportunity, globally. It's a very long runway in terms of how we think about this. You know, to be candid, I was very impressed by how our teams were able to do all the things that Prabir Adarkar said, and on top of that, build a new catalog that is item-based, that has you know tens of thousands to hundreds of thousands of items per store instead of hundreds of items inside of a restaurant menu. Rebuild search, you know, into an item-based experience first before a store-based experience. I mean, there's a lot of things that the team built, and they were able, you know, in parallel to move the unit economics. I think it's just a huge testament to the team in terms of the work that they did in both moving the top and the bottom line of building a better product that customers would be using over and again, and then also making moves on the profitability front. On hiring, I guess the first thing I would say is, you know, you got to be careful with what you read because, it's probably either not in context or just not accurate. You know, we're hiring at actually still very aggressive rates, multiples, in fact, of what I believe has been reported. But in general, let me talk a little bit about hiring maybe in the context of just our investment philosophy, because it's very similar. If you look at the history of DoorDash or how, perhaps, where we came from and maybe how we have enabled this continuous efficient process of inventing and in a disciplined way of scaling the business, it really came from the fact that we had a lot of constraints early on in the business. I mean, for the first 6 to 6.5 years of the business, we had a fraction of the financing of some of our peers. There was no ability to, you know, hire huge teams or spend a lot on marketing, spend anything on discounts or subsidies. We had to invent and win by building a superior product, gain profitability in the right ways, not by doing unnatural things that hurt the customer experience, but by doing the things that would increase selection, that would improve the service quality of our deliveries, that would offer more value in the form of DashPass and other programs, and improve our customer support. All of these things is what led us to have, you know, industry-leading retention, which has yielded, I think, some of the numbers that we've shown in the shareholder letter. All-time highs in our monthly active users, even as thankfully customers are now finally returning back inside restaurants. All-time highs in our DashPass subscriber base, all-time highs in our order frequency across cohorts. Building the best product as well as gaining efficiencies from operations and scale economies from marketing, that's really how the business has been built. Now, when I apply that same investment philosophy towards something like hiring, it can't just be, you know, to hire aggressively. It has to also be to invest in systems of how we can, you know, reapply systems that we've built, you know, for one category and give us leverage into categories, you know, B, C, D, E, F. And all of these ways of how we actually architect a system designed towards building the best customer experience and having the most efficient PNL. Your next question comes from the line of Doug Anmuth from JP Morgan. Your line is open. Thanks for taking the questions. I had two. First was just hoping you could talk about whether the inflationary pressures seen by your restaurant partners are changing the way they interact with or utilize DoorDash. Second, also was hoping you could talk about the response from Dashers to your Dash rewards program and any commentary, kind of way of framing, how much that's costing you. Thank you. Hey, Doug, maybe I'll start with the first here. Our average order values have increased slightly as a result of inflation. Obviously we pass on you know the large portion of that to our merchants so they benefit as well given that they're experiencing price increases in the cost of the food. And all else being equal, this would also have a positive impact on our margins. Now, the one thing I'll say is the reality is we've seen food cost inflation for over a year now, right, with chicken prices and other things. It's hard to tell exactly what impact inflation is having on order volume and on consumer engagement specifically because we don't have the counterfactual. Having said that, when you step back and you look at the results in the quarter and the fact that monthly active users are at all-time highs, the fact that DashPass members are at all-time highs and order frequency is at all-time highs, it speaks to the resilience of the platform and the fact that the product has consistently gotten better and better and better in terms of selection, in terms of quality, in terms of affordability. That leads to more consumer adoption, habituation, and an increasing usage over time. Sorry, Tony, did you want to add something to that? Yeah. Doug, I'll just chime in. I think your question is also, you know, if we're seeing any behavior on the merchant and the Dasher front. I would say a couple things. Inflation is definitely a concern we certainly are taking very seriously. We're doing that by making sure that all of our audiences are taken care of first. One of the things we've been fortunate to see, I'll echo a little bit of what Prabir said, and then I'll, you know, take your question on merchants and Dashers, which is just the resiliency of, you know, the core business of U.S. restaurants where I think it's because when I take a look at all of the possible areas where consumers could spend and consume, eating is still the, you know, one of the largest and certainly the highest frequency categories, where people eat 3 times a day, 90 times a month. If you start looking at some of the other categories we now participate in, that's well over 100 shopping occasions per month. When we have built the largest marketplace with the most retained and also the most engaged user base, it just gives us the most shots on goal in the face of something like inflation. When I translate that into, you know, our other two audiences of merchants and Dashers, you know, merchants, they continue to see DoorDash as a way to actually gain sales even though consumers are going inside their stores, which is fantastic. That's because dining in is very complementary to actually ordering delivery. I mean, when you're dining in, you're looking for that experience to maybe see people you haven't seen in a while in person and that's very complementary to ordering delivery because, again, you eat, you know, multiple times a day, 20-25 times a week. On the Dasher front, what we've done is, you know, we definitely recognize that inflation is impacting Dasher earnings and that's really what we wanted to solve for. It was the right thing for us to do given that we had a very fortunate position of having a U.S. restaurants business that's not only grown 250% over the last couple of years, but that have materially also increased its profitability such that we can choose to reinvest those, you know, cash flows into, you know, serving all of our audiences. That's what we did. We gave out, you know, two programs. One was a 10% cashback on fuel expenses, and the other was a bonus program that was tied to the distance in which Dashers would be driving. The results so far have been very satisfying, where you know, 90% of Dashers are really excited about the benefits that we've offered so far. Just to offer a little more color to what Tony just described, Doug. Look, we chose to absorb the costs of these Dasher benefits in order to preserve earnings. Like, we could have chosen to pass on the cost to consumers, and that would have had an impact on growth due to consumer price elasticity. Instead, we chose to absorb the program cost. Let me explain why we did that. You know, when we keep consumer prices unchanged, and if we ensure the Dasher earnings are preserved, that enables us to maximize growth because having adequate supply ensures that the consumer quality is preserved, which then drives the growth flywheel in a slightly different way, right? There's the question of, well, how do you fund it? As Tony pointed out, the U.S. restaurant business is very profitable, and we use the profits from the restaurant business for two things. First, as we previously talked about, to invest in new areas and international and so on. The second is to reinvest back in the core restaurant business. We're growing scale and generating growth in our core restaurant business. Historically, we've taken these efficiencies, and we've used them to lower consumer prices, lower merchant commissions, increase Dasher earnings. Today, because of gas prices, there's this unique need for Dashers, and so we're allocating more investment to actually help increase Dasher earnings. If gas prices revert in the future, we'll revisit that. In short, you know, absorbing these costs is basically net neutral to our EBITDA expectations. Your next question comes from the line of Michael McGovern from Bank of America. Your line is open. Hey, guys. Thanks for taking my question. I wanted to see if you would double-click into the metric that Q1 2022 was the largest quarter for new consumer acquisition since Q1 last year, despite lower sales and marketing as a% of revenue. You know, what's driving this? I was curious if these customers are still primarily coming from the restaurant category, or are they coming more frequently for non-restaurant for the first time? Thanks. Yeah. Thanks, Michael. Let me take this question. Yeah. If you look back, the you know Q1 2021, so Q1 last year, was elevated in terms of customer acquisition as a result of fiscal stimulus. Ignoring that quarter, if you look at every other quarter up to Q1 2022, we you know we've acquired more customers than we did, and that just speaks to the fact that we're still under-penetrated in this category, and there's more customers to be acquired. The last thing I'll say is the majority of our business is the restaurant business, and so a lot of these customers join and place their first order on restaurants. We're seeing an interesting mix change, where now we've got you know a decent number of customers joining to actually use some of our other categories, not just restaurants. It's too early. Like, these are small percentages we're talking about. Over time, as DoorDash gets known for being, you know, your destination for all things local commerce, that, you know, the source of what product these customers use when they first join DoorDash will undoubtedly change. Your next question comes from the line of Deepak Mathivanan from Wolfe. Your line is open. Great. Thanks for taking the questions. Two questions from us. First, maybe can you unpack the drivers of sustained frequency gains? DashPass adoption and, you know, the non-food convenience categories is very strong, but how does it look between subscribers versus non-subscribers? You know, with consumers kind of going back to pre-COVID lifestyles, are you seeing differences in maybe the type of orders in terms of time when it's placed and basket sizes? Then, Prabir, just a, you know, financial question. Can you elaborate on the insurance reserves impact on first quarter cost of revenues? Is that some kind of accrual adjustment, or is there any change in underlying unit economics? Thank you. Sure. Deepak. Hey, Deepak. Go ahead, Tony, and I can pick up from there. Yeah. I'll take the first question, Deepak, and then, Prabir, I'll handle the question on insurance. You know, the reasons for the frequency gains are really coming from the improvements, you know, in our product. I mean, there's certainly, in parts, you know, some of the order frequency gains came from increasing contributions from our DashPass subscriber base. But if you, when you step back, I think a couple of points still are very important. Number one, dining in and ordering delivery are very complementary. In fact, we saw this at almost every phase of the pandemic. There were, you know, various geographies in various parts of the world, including the U.S., where certain states had reopened more aggressively perhaps than some others, where we saw that, you know, in the past couple of years, and certainly we're still seeing that in the first quarter of this year and even currently, where, you know, people are not substituting eating in with eating out. The second point I would say is we're constantly making improvements to the products. We're constantly increasing selection, whether that's restaurants, you know, grocery stores, convenience stores, pharmacy stores, alcohol stores, retail stores, et cetera. We're increasing the quality of the deliveries by maniacally getting rid of defects. We're improving affordability, part of which is coming from DashPass, and we're continuously investing in customer support to make sure that we always can delight customers and meet their increasing expectations. That's really why order frequencies are growing. Specifically on that, Deepak, you know, DashPass user order frequency has grown, and you've also got an increase in mix towards DashPass. Those two things sort of act in concert with each other. On your question on insurance reserves, we experienced an increase in the average claim amount driven by the outsized impact of, you know, a few very large claims. As a result, we adjusted our reserves for both for existing claims as well as for future claims by $35 million, which had about a 30 basis point impact to cost of sales. Even though the insurance costs increased, it's a relatively small portion of our cost of sales, certainly compared to other line items like payment processing or customer support, and, you know, is lower than what you might see in rideshare. You know, long way of saying this is an area where, you know, we haven't, because it's been a small cost, we haven't focused on it, but it also represents an opportunity where we have begun now to put in place new processes to control these costs in the long term. Last thing I'll say is, you know, in the near term, we expect insurance costs to remain elevated in the near term because it takes a while for these changes to reflect in our claims data, but we're gonna manage within the EBITDA range. Makes sense. Your next question comes from the line of Brian Nowak from Morgan Stanley. Your line is open. Thanks for taking my questions, guys. I have two. The first one, Tony, I know you always put a maniacal focus on efficiency and improving the process. Maybe just sort of qualitatively, could you talk to us about a couple of the biggest low-hanging fruit areas you still see room for improvement in the core U.S. restaurant delivery business? That's the first one. The second one, the point about 3P convenience reaching positive variable contribution. Was that sort of in line with what y'all thought at the start of the year, or is that ahead of schedule? And if it is ahead of schedule, any reason why we're not raising full year EBITDA? Is it just too small? Are you gonna reinvest? Can you talk to us about that a little bit? Thanks. Yeah. Hey, Brian. There's still a large room to go in terms of, you know, finding more and more efficiency. Really, there's kind of two general ways I think about this. You know, the first is, how do we just find the next level of product market fit, which certainly would grow our retention and order frequency even further, thereby give us even more leverage on the sales and marketing side of the PNL, overall PNL. Then the second is really efficiency from operations. You know, take, for example, the wait times we still see at stores. I mean, especially given some of the labor challenges that you're seeing at whether it's restaurants or whether it's grocery stores or convenience stores. You know, everyone in the service industry is certainly feeling this. That makes, you know, wait times as well as inventory management have higher variance. Being able to manage that variance and being able to lower those wait times and increase or improve the accuracy, I should say, of the inventory management, I think are all areas. The two general, you know, approaches I generally think of this is how do we, you know, build the next level of product such that our consumers love it even more, which gives us lots of sales and marketing leverage. On the other side, it's really finding efficiency on the cost front. On your question, Brian, on 3P convenience and why not raise the guide, it's a small portion right now. Secondly, any profits we generate, as I mentioned earlier, we reinvest in trying to drive scale and growth so that we maximize long-term profit dollars. Your next question comes from the line of Ronald Josey from Citi. Your line is open. Great. Thanks for taking the question here. I wanted to ask maybe a bigger picture on DashPass, just given the importance and greater overall frequency of usage. You know, we're seeing more categories being added here and available on the service, and that talks to the value. But I wanna understand a little bit more, how do you prove the value here to members? In surveys that we've run, you know, one of the best parts of why people order or have DashPass is because it saves money. The same amount of folks on the other side say it's too expensive. Can you talk to us a little bit about the value on DashPass and marketing there? Then in the letter, you know, Tony, you talked about first-party commerce and under-penetration here. Wanted to hear a little bit more about what you're doing in terms of drive and how that might help answer those questions. Thank you. Sure. I can start, and feel free, Prabir, if you wanna chime in on some of these. I think the first question around, you know, DashPass and value, you know, I kinda take this in two parts. You know, one part you kind of answered, I think in your question, which really, you know, came in the form of savings, right? I think that makes a lot of sense, especially for you know, users that are discovering our product, you know, multiple times a month or, you know, possibly multiple times a week. I think you know, and we'll continue to make those investments. The other thing I would say is that we also wanna, you know, improve the product for DashPass itself by making sure that we can offer, you know, either exclusive or preferred types of product experiences that are only made available through DashPass, as well as the fact that we're introducing so many more categories. You know, I know that overall, you know, customers who've ordered, who are ordering outside of our restaurants category, the last number we announced was around 14%, in Q4. In certain markets, that number is much higher than that. You see a lot of that coming from DashPass buyers and subscribers. Remind me your second question again. Actually, before you move on to the second question, Tony, you know, just a couple of things to add on. I mean, you're exactly right. Far, the program has been about delivering savings to consumers, and that's fine because we had to start somewhere, and that felt like the natural place to start. Over time, now that we've got the program at scale, and it's something that both merchants and consumers recognize the value in, you can start layering in benefits that extend beyond just dollar savings, right? Think of that as exclusive items. A restaurant wants to market something specifically to these consumers. We can do exclusive items with DashPass. We can provide exclusive access to certain restaurants that might be more farther away compared to restaurants that are in your vicinity. We can do segmented offerings. We launched our DashPass for Students, and this is a way of tailoring the benefits to a certain segment of the population to make it more interesting for them. We can add selection so that if, you know, maybe you don't eat from restaurants today, and as a result, the savings opportunity isn't available to you. If we add in grocery and convenience stores, now you might have other use cases for which DashPass is actually beneficial. There's things we can do, you know, within DashPass in order to tailor the benefit depending on who the audience is and which is getting started. Ron, I think your second question is actually about drive and kind of the digitization of kind of the first party experience, right? First of all, the premise is absolutely right. I mean, I think if there's any positive from, you know, COVID, it's that, you know, every physical business was effectively forced or compelled to become a digital operations almost somewhat overnight. As a result, I think the major lesson everyone learned is that digital sales can complement their in-store business and in-store activity. In fact, those who have invested very aggressively in their e-commerce operations, I think, have really benefited and continued to have shown strength. That's what we're seeing, you know, in terms of the merchant demand and willingness to work with us to effectively transform their business models into becoming digital operations. You know, drive obviously has played a big part of that, where it's effectively now diversified from starting with large enterprise restaurants only to now serving everyone from non-restaurants, you know, convenience stores, pet stores, liquor stores, grocery stores, retail stores. It has a large runway, you know, both in the U.S. as well as globally. It also has a big runway in serving small businesses as well. That's really why we built, you know, Storefront, because a lot of these small businesses aren't even able right now to have online ordering systems that will talk or seamlessly integrate into their back-of-house systems. Storefront really does that. You know, our latest product that we've introduced as part of our platform services business, actually it was an acquisition, called Bbot. That product really helps manage the in-store operations and becomes a bit of the operating system inside these restaurants. There's a lot of work we have to do in order to build an end-to-end system to really power the first party digital operations of these businesses. It's an opportunity that you're absolutely right exists within restaurants, outside of restaurants and globally. Thank you, Tony. Your next question comes from the line of Andrew Boone from JMP Securities. Your line is open. Thanks for taking my questions. I have two, please. The first is, from the letter, it feels like convenience is starting to get to scale. The question is really, what's the next category that you guys are really excited about that you think that you can lean into and invest behind and kind of get to that same kind of variable contribution margin breakeven and kind of velocity? Then the second question is more big picture. Understood that as you guys see larger opportunities, you're investing there. But can you just remind us in terms of a framework of how you think about allowing margin expansion to flow through to the model just overall? How do you think about kind of growth versus profitability? Thanks so much. Hey, it's Tony. I'll take the first question, and maybe Prabir can take the question on the economics and how we reinvest those back into the model. On the first, look, all of these categories are pretty enormous, right? You know, restaurants in the U.S. is $800 billion. I mean, if you looked at grocery and convenience, you know, they add to over $1 trillion in the U.S. Outside of the U.S., it's much larger than that. Then if you include the other categories of, you know, pets, alcohol, pharmacy, retail, we get to an even larger number. I think when the opportunity is that large, we don't, you know, think that much about which one of them is going to get there first. We instead just think about what's the right amount to invest and when to do it, right? That really goes back to the investment philosophy that we kind of outlined from, you know, how we launch businesses in the first place, which and this is true for, you know, all of the businesses at DoorDash, whether it was the restaurants marketplace, the platform business with products like drive or Storefront or the convenience business or the ads business that we're launching, the international markets, which really is how do we build the best possible product to actually meet or ideally exceed the customer expectations and keep doing that. How do we actually line by line work down the cost so that we can achieve positive unit math before we consider scaling? Yeah. On the margin flow through question, you know, we're running the business with the objective of maximizing scale so that in the long term, we maximize profit dollars, right? Tony alluded to these categories that we're operating in. They're very large. They're very under-penetrated today, and that's why we're investing to build scale. What we look for is this combination of strong signals of product market fit, as well as a path to attractive unit economics. Let me give you an example. We cited the third party convenience example. If you look at our DashMart today, and I look at all the stores on DoorDash on any given day, the most popular stores in terms of orders, you know, of the top 10, the majority are DashMarts. That's a signal of strong product market fit because that's the customer speaking, right? You see that in the data. You know, these signals of product market fit coupled with progress that we see in unit economics, this is what gives us confidence to continue investing, because the belief is that it will lead to solid growth for many years to come. Now, the core US restaurant business is profitable. It's growing, and the profit margins continue increasing. We're using those profits, you know, from that core business to make these investments. Said differently, we're not trying to manage the business to increase margins or even the dollar amount of EBITDA, because we're essentially reinvesting those profits in order to grow these other areas. Now to the extent we don't see the right progress, whether it's product market fit indicators or the right progress from a margin perspective or a unit economics perspective for these new areas, we scale back. That's the discipline, you know, that we've run the core US business with up to this point that allow us to build, you know, a profitable core US business. We will flex and adjust depending on the signals we see, but the intent right now is to reinvest these profits, provided the signals are there, so that we can drive growth for many years to come. Thank you. Your next question comes from the line of Eric Sheridan from Goldman Sachs. Your line is open. Thanks for taking the questions. Two, if I could. Tony, maybe a bigger picture question. Obviously, you know, you haven't been a public company for very long, and you see periods like this where valuation gets compressed very quickly and capital becomes a little bit more constrained broadly in growth industries. How are you thinking about the capital you have on the balance sheet as elements of playing offense and maybe accelerating things from a buy versus build decision and where you wanna take the platform longer term versus using capital as a sort of fortress to sort of shore up and think about broader industry structures over the medium to long term? I'd love your perspective on that given the broader market environment we find ourselves in. Maybe to ask Ronald's question a little bit differently, you know, given the current labor environment for delivery folks, do you see companies that have been more reluctant to maybe embrace platforms like you, either wanting to partner either directly on the platform or utilizing drive? You know, we saw this in different hotel cycles with the OTAs over the years, where periods of time of demand or labor constraint can lead people to make partnerships in digital. Could we see partners that have historically been reluctant to partner with you maybe come back and think about platform dynamics to fulfill their business needs? Thanks. Hey, Eric. Yeah, thanks for the questions. You know, on the first one, you know, I think the best way to always grow is from your own cash flows, right? That's why we're in a very privileged position where we have, you know, a very cash generating business in our U.S. restaurants marketplace that really allow us to make most of our investments. You know, and we also have a cash balance north of $4 billion, which, to your point, gives us quite a lot of flexibility. I think it's really important to know when to use capital to your advantage and maybe when not to use capital, you know, to your point. You know, I think from a building businesses and products perspective, I think it's really important that we have to achieve product market fit first, right, before we deploy capital to actually scale those businesses. In fact, I'd argue we have to first find product market fit, then find efficient ways to grow that are unique to that product, and then consider deploying capital to very, very aggressively scale that business. That's kinda how we think about deploying capital from an organic perspective. I think from an inorganic perspective, I think the bar is just really high, right? M&A, as I'm sure you know, does not have a historical track record for success. I think, you know, for us, we keep that bar very, very high and only really consider acting upon it if we see two things. One, obviously, if it's accretive to our business in terms of, you know, giving us the advantage of investing more efficiently in an area that we find very attractive for years to come. And secondly, if we find a team that we think is not only aligned on building the same thing over the long run, but how we actually build it, right? This, you know, really is reflected in the example of Wolt, which again should close the first half of this year, where we saw in their business you know, world-class retention and order rates, you know, metrics that show that they've built, you know, a product that is best in class and loved by really all of their audiences. They did it with an incredibly capital efficient P&L in many geographies, including very difficult to operate in geographies. They had a team that you know, thought very similarly to how we wanted to build, you know, for the long run and what it is that we actually wanted to build. I think, you know, that's really how we think about, you know, making these investments, whether it's, you know, organic or inorganic. I really do think there are times where, you know, capital certainly is a privilege we have now, you know, given the fact that we've built a cash flow positive business as well as have a lot of money on the balance sheet with no debt. When we deploy it is a very, very important decision that we take seriously. Your next question comes from the line of Mark Mahaney. Oh, sorry. Sorry, I don't think we answered Eric's second question. Prabir, are you gonna take that? Yeah. The second question was really around partnerships. I mean, you know, just given the scale of our business now, whether it's the marketplace side or even the platform services side, and the fleet that we have and the size of that fleet, you know, with products such as drive, they're getting more and more interesting, particularly in this era when the labor market is tight, right? Particularly when it comes to the delivery space. Because everyone, you know, Tony alluded to this in an earlier question around interest in drive, it began simply with restaurants. Now it's all these different categories beyond restaurants that are all looking to reach customers on the same day, in fact, the same hour basis. This is particularly relevant, you know, outside of the U.S. where these options don't exist, where it's actually unique, it's a unique customer experience. Where we are seeing, you know, the success with Drive as well as the greater secular shift towards convenience Drive, you know, an increased conversations with partners outside of the restaurant category in different categories that are actually interested in embracing same-day fulfillment. Yeah. The only thing I'd add, Eric, is just that I think just as consumers are exhibiting the behavior where they're going back inside restaurants and seeing friends again and families again and eating together, and they're also ordering delivery at the same time, restaurants are noticing that too. As a result, I think the argument of incrementality, not just in terms of incremental customers, but actually incremental orders is really starting to sink in. The next question comes from the line of Mark Mahaney from Evercore ISI. Your line is open. Thanks. Could you just touch on latest thoughts on ad revenue or, yeah, over time? I think that's still very early stages, but, you know, anything on timing. On the average order frequency reaching a new high, can you provide any detail on how wide of a gap you're seeing between average order frequency for people who just start, and then they would become DashPassers, and then they become mature, you know, they've been on DashPass for 6 months, 12 months, et cetera? Like, how wide is that gap? Maybe it would help us think about the curve of usage in the future. Thanks a lot. Sure. Hey, Mark. So first on ad revenue, we haven't disclosed the size of that business. It's still young and nascent, and there's a lot of room for it to grow. Yeah, I will say it is an attractive opportunity for us, just given the size of our user base, you know, the frequency of interactions on our platform, as well as the number of surfaces that are available. Having said that, we've not been in a rush to monetize. You know, our focus, you know, we need to make sure we balance delivering an appropriate return to advertisers with the consumer experience. It would be a negative if consumer experience is impacted or conversions impacted in any way. Certainly over the coming time periods, I mean, as this business scales, we will use these incremental profits to invest into growth and to strengthen the core US business as well as our other initiatives beyond restaurants. On your question regarding order frequency, it's a tough question to answer because, you know, we're continuing to see growth across cohorts. Let's take DashPass as an example. Once a user joins DashPass, over time, their order frequency for that cohort just has continued increasing. That spread just continues to widen. You know, I'm not trying to avoid the question. It's an imprecise question. It'll be a different story if these order frequencies remain static, but the reality is you've got growth taking place at a cohort level. Okay. Thank you, Prabir. Your next question comes from the line of Brian Fitzgerald from Wells Fargo. Your line is open. Thanks, guys. A couple quick ones. DashMart's essentially the micro fulfillment centers. I think last time we checked, they were carrying around 2,000 SKUs. Can you talk about the kind of trajectory of growth in terms of locations or SKU base that you're running at DashMarts? Then we just got back from marketing around Europe and we got asked, you know, every meeting, you know, how's the US North American consumer versus European? Looking at Wolt versus North America, any dynamics to call out there with respect to, you know, the strength or the price sensitivity of the consumer geographically? Hey, Brian, it's Tony. I'll take the question on DashMarts and then it maybe Prabir can, you know, follow on the second question around kind of geographic differences in terms of what we're noticing. On DashMarts, you know, the way I think about this is, you know, the problem to solve isn't, you know, how many SKUs to offer inside of a DashMart or whether to build DashMarts. The problem really to solve is how do we actually build the best, you know, convenience and grocery delivery experience? When you look at where the penetration levels are today, and just take, for example, the U.S., relative to where they could be, I think there's a massive gap. If anything, you know, the penetration levels today in convenience and grocery delivery is fairly low and has largely stagnated, you know, post-COVID. I think that suggests that, you know, the customer actually prefers perhaps, you know, either buying online, picking up in store or perhaps just shopping inside the store altogether. What we're trying to solve is how do we build an experience that can work for both consumers, grocers, retailers, as well as Dashers. The way we think about it is, you know, for consumers, how do we build an experience that can give them exactly what they ordered, that can, you know, do it at a price point that matches their expectations with greater convenience? If we can figure that out, which is gonna require lots of invention, you know, such as figuring out inventory management, you know, built from the ground up, as well as, you know, merchandising, getting the right SKUs and selection, to the point of your question, as well as doing it more conveniently, then I think that that's a service that, you know, grocers and retailers will like, will want as well. That's something that we can help them with as they think about how can they, you know, add effectively another use case to their already very successful buy online, pickup in store use case. Make that incremental for them and have, you know, these warehouses that are actually optimized for delivery. That's really what we're trying to do with DashMart. On your international question, and I know, Razine, that in Europe. Just as a point of reference, I'm not sure the price sensitivity question, to be honest with you. At least based on our analysis, if you look outside the U.S. and exclude U.K. for a second, the levels of penetration in terms of food delivery are quite low, right? Whether it's European countries, whether it's Australia, Japan, whatever. The reason for that is because it's a couple of things. One is the number of restaurants that are available are low, so it's a selection problem first and foremost. Second, the quality of experience is iffy. What I mean by that is, you know, some of these countries, food delivery is essentially lead gen, which means that it's the restaurant that's actually fulfilling the order, and consumers don't have visibility into whether the order is gonna be delivered, you know, who to call if it's late. That just leads to poor consumer experience that then ultimately leads to lower adoption. I think the opportunity is there, as long as we address these fundamental building blocks of selection, quality, and affordability in these countries, whether it's Europe or Australia or Japan, that is very early in terms of their development along these dimensions. Got it. Thanks, guys. Appreciate it. There are no further questions at this time. I turn the call back over to the DoorDash team. Thank you, Joel, and thank you everybody for the questions and your time today. We look forward to being in touch with many of you soon. Have a good evening. This concludes today's conference call. You may now disconnect.