DoorDash turns a profit
What a long, strange (Lyft!) ride it’s been.
DoorDash posted a $162 million profit in the three months ending September 30, the delivery company’s first profitable quarter since its December 2020 stock market debut. It also announced a partnership with Lyft that lets DashPass subscribers access perks like discounts on rides and free priority pickup upgrades.
During its Wednesday afternoon earnings call, DoorDash’s execs skipped prepared remarks (as usual) in favor of an immediate question-and-answer session with analysts who were primed to talk partnerships and acquisitions and international expansion.
But, as CEO Tony Xu likes to remind them: “We keep the main thing… the main thing,” he said during the call. “And the main thing at DoorDash is building and enabling local commerce.”
Xu frequently uses this framing during earnings reports, explicitly tying any new or growing initiative from DoorDash to its core product. I’ve long appreciated this focus — probably because it’s how I make sense of DoorDash’s growing business in a sea of tech companies expanding as fast as possible in all directions. (Later in the call, Xu repeated another tried-and-true favorite: “A successful ads business is always preceded by a successful marketplace business,” he said in response to a question about advertising growth.)
That’s how Xu framed the news of DoorDash’s Lyft partnership, which is intended to drive DashPass subscriptions. Company data from last summer shows that DashPass members order more frequently and spend more money on the platform.
“Lyft is a service that's used by millions of riders. Many of those writers already are DoorDash customers. Some of them are DashPass subscribers, but a lot of them are also not DashPass subscribers,” Xu said. “It’s a great opportunity for us to continue to add engagement to the DashPass program, as well as new DashPass members.”
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DoorDash posts another record quarter
A DoorDash-Lyft partnership makes so much sense that I honestly thought I’d heard this news before.
I did not. I was instead misremembering when Grubhub teamed up with Lyft years ago to offer particular perks to some users for both food delivery and rideshare. (Lyft’s help pages still list the benefit.)
Earlier this year, some analysts called for a DoorDash-Lyft linkup in order to better compete with Uber’s diversified offering. Per Forbes’ reporting in March:
“Both stocks are undervalued on their own but the possibility of DoorDash and Lyft uniting together against their common competitor Uber makes enormous sense and could create significant value for both DoorDash and Lyft.”
At the time, the analysts proposed a scenario where Lyft and DoorDash would combine their monthly subscription products in an effort to more directly compete with Uber. The newly announced partnership doesn’t go *quite* that far, but it gets pretty close, offering customers of both DoorDash and Lyft reciprocal perks on each platform.
It’s a good deal. According to some bolded text in an email from a DoorDash rep announcing the news (I love this shade!): “DashPass now provides the greatest average savings of any membership program in the US offering both delivery and rideshare.”
We know who DoorDash is besting here, though the savings calculation includes more than just the Lyft deal. DoorDash says that its Lyft rideshare and Max streaming benefits (DashPass subscribers receive a free Max subscription, too) for US-based DashPass subscribers together create an average annual savings of over $500.
During the call, Xu didn’t directly address a question from one analyst who (I think) asked about the potential for a driver partnership between the two companies.
The exact question was, “Is there anything different here with Lyft that there is the driver component as well?” — and while it went unanswered, there’s nothing in the public details of the deal to suggest there is.
But, speaking of Lyft, just last week the company agreed to a $2.1 million settlement proposed by the Federal Trade Commission. Lyft, the FTC says, made “deceptive earnings claims about how much money drivers could expect to make” while driving on its platform.
