DoorDash (DASH)

On-demand food delivery service DoorDash (NYSE:DASH) beat Wall Street’s revenue expectations in Q3 CY2025, with sales up 27.3% year on year to $3.45 billion. Its GAAP profit of $0.55 per share was 18.7% below analysts’ consensus estimates.

Company Overview

Founded by Stanford students with the intent to build “the local, on-demand FedEx", DoorDash (NYSE:DASH) operates an on-demand food delivery platform.

The iPhone changed the world, ushering in the era of the “always-on” internet and “on-demand” services - anything someone could want is just a few taps away. Likewise, the gig economy sprang up in a similar fashion, with a proliferation of tech-enabled freelance labor marketplaces, which work hand and hand with many on demand services. Individuals can now work on demand too. What began with tech-enabled platforms that aggregated riders and drivers has expanded over the past decade to include food delivery, groceries, and now even a plumber or graphic designer are all just a few taps away.

A company’s long-term performance is an indicator of its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Thankfully, DoorDash’s 27.7% annualized revenue growth over the last three years was exceptional. Its growth surpassed the average consumer internet company and shows its offerings resonate with customers, a great starting point for our analysis.

This quarter, DoorDash reported robust year-on-year revenue growth of 27.3%, and its $3.45 billion of revenue topped Wall Street estimates by 2.6%.

Looking ahead, sell-side analysts expect revenue to grow 42.2% over the next 12 months, an acceleration versus the last three years. This projection is eye-popping for a company of its scale and indicates its newer products and services will spur better top-line performance.

Request Growth

As a gig economy marketplace, DoorDash generates revenue growth by expanding the number of services on its platform (e.g. rides, deliveries, freelance jobs) and raising the commission fee from each service provided.

Over the last two years, DoorDash’s orders, a key performance metric for the company, increased by 20% annually to 776 million in the latest quarter. This growth rate is among the fastest of any consumer internet business and indicates its offerings have significant traction.

In Q3, DoorDash added 133 million orders, leading to 20.7% year-on-year growth. The quarterly print isn’t too different from its two-year result, suggesting its new initiatives aren’t accelerating request growth just yet.

Revenue Per Request

Average revenue per request (ARPR) is a critical metric to track because it measures how much the company earns in transaction fees from each request. This number also informs us about DoorDash’s take rate, which represents its pricing leverage over the ecosystem, or "cut" from each transaction.

DoorDash’s ARPR growth has been mediocre over the last two years, averaging 3.8%. This isn’t great, but the increase in orders is more relevant for assessing long-term business potential. We’ll monitor the situation closely; if DoorDash tries boosting ARPR by taking a more aggressive approach to monetization, it’s unclear whether requests can continue growing at the current pace.

This quarter, DoorDash’s ARPR clocked in at $4.44. It grew by 5.5% year on year, slower than its request growth.

For gig economy businesses like DoorDash, gross profit tells us how much money the company gets to keep after covering the base cost of its products and services, which typically include server hosting, customer support, and payment processing fees. Another cost of revenue could also be insurance to protect against liabilities arising from providing transportation, housing, or freelance work services.

DoorDash’s gross margin is slightly below the average consumer internet company, giving it less room to invest in areas such as product and marketing to grow its presence. As you can see below, it averaged a 50.2% gross margin over the last two years. Said differently, DoorDash had to pay a chunky $49.75 to its service providers for every $100 in revenue.

In Q3, DoorDash produced a 51% gross profit margin, up 1.8 percentage points year on year. DoorDash’s full-year margin has also been trending up over the past 12 months, increasing by 2.7 percentage points. If this move continues, it could suggest better unit economics due to more leverage from its growing sales on the fixed portion of its cost of goods sold (such as servers).

Consumer internet businesses like DoorDash grow from a combination of product virality, paid advertisement, and incentives (unlike enterprise software products, which are often sold by dedicated sales teams).

DoorDash is efficient at acquiring new users, spending 35.6% of its gross profit on sales and marketing expenses over the last year. This efficiency indicates relatively solid competitive positioning, giving DoorDash the freedom to invest its resources into new growth initiatives.

Operating income is often evaluated to assess a company’s underlying profitability. In a similar vein, EBITDA is used to analyze consumer internet companies because it excludes various one-time or non-cash expenses (depreciation), providing a clearer view of the business’s profit potential.

DoorDash has been a well-oiled machine over the last two years. It demonstrated elite profitability for a consumer internet business, boasting an average EBITDA margin of 18.7%. This result was particularly impressive because of its low gross margin, which is mostly a factor of what it sells and takes huge shifts to move meaningfully. Companies have more control over their operating margins, and it’s a show of well-managed operations if they’re high when gross margins are low.

Analyzing the trend in its profitability, DoorDash’s EBITDA margin rose by 15.5 percentage points over the last few years, as its sales growth gave it immense operating leverage.

In Q3, DoorDash generated an EBITDA margin profit margin of 21.9%, up 2.2 percentage points year on year. The increase was encouraging, and because its EBITDA margin rose more than its gross margin, we can infer it was more efficient with expenses such as marketing, R&D, and administrative overhead.

Revenue trends explain a company’s historical growth, but the change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

In Q3, DoorDash reported EPS of $0.55, up from $0.38 in the same quarter last year. Despite growing year on year, this print missed analysts’ estimates, but we care more about long-term EPS growth than short-term movements. Over the next 12 months, Wall Street expects DoorDash’s full-year EPS of $1.97 to grow 73.2%.

Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.

DoorDash has shown robust cash profitability, driven by its cost-effective customer acquisition strategy that enables it to invest in new products and services rather than sales and marketing. The company’s free cash flow margin averaged 16.6% over the last two years, quite impressive for a consumer internet business.

Taking a step back, we can see that DoorDash’s margin expanded by 12.6 percentage points over the last few years. This is encouraging because it gives the company more optionality.

DoorDash’s free cash flow clocked in at $723 million in Q3, equivalent to a 21% margin. This result was good as its margin was 4.6 percentage points higher than in the same quarter last year, building on its favorable historical trend.

Companies with more cash than debt have lower bankruptcy risk.

DoorDash is a profitable, well-capitalized company with $8.32 billion of cash and $3.26 billion of debt on its balance sheet. This $5.07 billion net cash position is 4.9% of its market cap and gives it the freedom to borrow money, return capital to shareholders, or invest in growth initiatives. Leverage is not an issue here.

It was great to see DoorDash increase its number of requests this quarter. We were also happy its revenue outperformed Wall Street’s estimates. On the other hand, its EBITDA guidance for next quarter missed. This outlook is weighing on shares, and the stock traded down 16.7% to $198.29 immediately following the results.

Updated: December 4, 2025 at 9:31 PM EST

When considering an investment in DoorDash, investors should account for its valuation and business qualities as well as what’s happened in the latest quarter.

DoorDash is truly a cream-of-the-crop consumer internet company. To begin with, its revenue growth was exceptional over the last three years, and its growth over the next 12 months is expected to accelerate. On top of that, its rising cash profitability gives it more optionality, and its expanding EBITDA margin shows the business has become more efficient.

DoorDash’s EV/EBITDA ratio based on the next 12 months is 28x. Looking at the consumer internet space today, DoorDash’s qualities as one of the best businesses really stand out, and we like it at this price.

Wall Street analysts have a consensus one-year price target of $276.17 on the company (compared to the current share price of $221.22), implying they see 24.8% upside in buying DoorDash in the short term.