The Second Straight Quarter of Dramatic Non-GAAP Improvement
DoorDash's Q1 2023 10-Q showed Adjusted EBITDA nearly quadrupling and free cash flow swinging sharply positive, alongside a newly upheld Proposition 22. This Form 10-Q, covering the quarter ended June 30, 2023 and filed with the SEC in August 2023, confirms that quarter wasn't a one-off: Adjusted EBITDA» grew 171% year-over-year to $279 million from $103 million, and free cash flow» grew 262% to $311 million from $86 million. Revenue grew 33% to $2,133 million, and GAAP net loss narrowed further, to $172 million from $263 million a year earlier - the second consecutive quarter of year-over-year GAAP loss improvement, following Q1 2023's smaller narrowing.
The pace of buyback spending also accelerated: DoorDash repurchased 4.4 million shares for $301 million in Q2 2023 alone (weighted-average price $67.66), on top of the $392 million already spent in Q1. Across the first six months of 2023, DoorDash spent $693 million of the $750 million authorized in February - and the filing discloses that only approximately $57 million remained available under the authorization as of June 30, 2023, meaning the program will need a fresh authorization within the next quarter or two if DoorDash intends to keep buying at this pace.
The Prescription
DoorDash should announce, ahead of exhausting the current authorization, whether and at what size it plans a third buyback program - the market has now seen two consecutive authorizations spent faster than the one before it ($400 million over roughly ten weeks in 2022, $750 million on pace to be exhausted within two quarters here), and a predictable near-term gap in repurchase activity (or a surprise new program) is the kind of thing that moves a stock with DoorDash's history of large intra-quarter price swings. Silence on this specific point, given the pattern the company itself has established, is a real gap in investor communication.
What it should stop doing: treating the Proposition 22 legal saga as resolved after the March 2023 appellate win. This filing discloses that the California Supreme Court granted review of the case in June 2023 - meaning the appellate court's ruling in DoorDash's favor is not final, and the state's highest court could still overturn it. DoorDash's own risk-factor language continues to flag this correctly, but investors reading only the headline "Prop 22 upheld" news from March 2023 without following this filing closely could reasonably believe the matter is closed. It isn't.
Key Financial Metrics
Q2 2023 vs. Q2 2022 - consolidated, reported in USD (DoorDash reports natively in USD, no FX conversion needed)
| Metric | Q2 2023 | Q2 2022 | YoY |
|---|---|---|---|
| Revenue | $2,133M | $1,608M | ✅ +33% |
| Adjusted EBITDA» | $279M | $103M | ✅ +171% |
| Operating Income (Loss) | $(211)M | $(273)M | ✅ loss narrowed 23% |
| Net Income (Loss) | $(170)M | $(263)M | ✅ loss narrowed 35% |
| Free Cash Flow» | $311M | $86M | ✅ +262% |
Balance sheet: DoorDash's 10-Q compares quarter-end to the prior fiscal year-end, not the year-ago quarter, so the columns below are Jun 2023 vs. Dec 2022
| Balance sheet metric | Jun 2023 | Dec 2022 | Change |
|---|---|---|---|
| Total Assets | $9,601M | $9,789M | ⚠️ -2% |
| Total Liabilities | $3,194M | $3,021M | ⚠️ +6% |
| Total Stockholders' Equity | $6,396M | $6,754M | ⚠️ -5% |
Free Cash Flow was $311 million for the quarter (Q2-only operating cash flow of $393 million, derived from the six-month figure of $790 million less the $397 million already disclosed for Q1 2023, less $27 million of Q2-only capex and $55 million of Q2-only capitalized software, both similarly derived), up sharply from $86 million in the same quarter last year. Total cash and marketable securities (cash and cash equivalents plus short- and long-term marketable securities, excluding $297 million of funds held at payment processors and $144 million of long-term restricted cash) stood at $3,837 million as of June 30, 2023, roughly flat versus $3,720 million three months earlier - strong free cash flow this quarter was almost entirely offset by the $301 million spent on the buyback.
DoorDash's Adjusted EBITDA grew 171% year-over-year to $279 million and free cash flow grew 262% to $311 million, confirming Q1 2023's improvement wasn't a one-off - while the $750 million buyback authorized in February 2023 was nearly exhausted (only ~$57 million remaining) after just five months, and the California Supreme Court agreed to review the Proposition 22 ruling that had gone DoorDash's way in March.
Key Operational Metrics
Q2 2023 vs. Q2 2022
| Metric | Q2 2023 | Q2 2022 | YoY |
|---|---|---|---|
| Total Orders | 532M | 426M | ✅ +25% |
| Marketplace GOV» | $16,468M | $13,081M | ✅ +26% |
| Contribution Profit» | $620M | $381M | ✅ +63% |
| Contribution Profit as a % of Marketplace GOV | 3.8% | 2.9% | ✅ +0.9pp |
| Net Revenue Margin (Revenue ÷ Marketplace GOV) | 13.0% | 12.3% | ✅ +0.7pp |
| GAAP Gross Profit | $951M | $686M | ✅ +39% |
Contribution Profit grew 63% year-over-year, again well ahead of revenue's 33% growth, extending the margin-expansion trend this site has tracked in every quarter since Q1 2022. Contribution Margin (Contribution Profit as a percentage of revenue) reached roughly 29%, up from roughly 24% a year ago and the highest level this site has recorded. Net Revenue Margin also expanded again, to 13.0% from 12.3%. DoorDash still does not disclose exact merchant, consumer, or Dasher headcounts, or an absolute DashPass subscriber count.
Beyond the Usual
The Buyback Ran Faster Than Its Predecessor - $693 Million of $750 Million Spent in Two Quarters
DoorDash repurchased 11.2 million shares of Class A common stock for $693 million (weighted-average price $61.85) during the first six months of 2023, against the $750 million authorized in February 2023 - meaning approximately $57 million remained available as of June 30, 2023. At this pace, the program will be fully spent well within a year of authorization, faster than the roughly ten-week completion of the 2022 program, though that program was smaller ($400 million). Financing activities for the six months ended June 30, 2023 show $698 million used, almost entirely the $693 million of repurchases.
The California Supreme Court Agreed to Review Proposition 22, Reopening the Question the March Appellate Ruling Seemed to Close
In April 2023, petitioners challenging Proposition 22 filed a petition for review with the Supreme Court of California, following the March 2023 appellate ruling that had upheld nearly all of the measure as valid state law. This filing discloses that the California Supreme Court granted that petition for review in June 2023. This means the March 2023 win this site flagged as reversing years of legal uncertainty is now itself under review by the state's highest court, and the ultimate outcome remains genuinely open. Proposition 22's provisions continue to apply and shape DoorDash's Dasher-related costs while the review proceeds.
The CA EDD payroll-tax audit disclosure includes a new detail this quarter: DoorDash states it "has recorded an accrual for this matter within accrued expenses and other current liabilities" as of June 30, 2023 - the first quarter this site has seen DoorDash confirm a specific balance-sheet accrual tied to the EDD assessment, rather than describing the matter only in narrative risk-factor language. The filing does not disclose the accrual's dollar amount.
Stock Price Since Last Quarter
DoorDash's stock rose again in the second quarter of 2023, from a March 31, 2023 close of $63.56 to a June 30, 2023 close of $76.42 - a 20% increase, the second consecutive quarterly gain this site has tracked (DoorDash has not split its stock since its IPO, so these remain actual nominal prices). The stock remains down roughly 63% from its $205.98 peak recorded at the end of Q3 2021, but the two-quarter recovery from the December 2022 low of $48.82 now totals 57%.
Target Valuation Range
~3.4x TTM EV/Revenue, up from ~2.9x three months earlier. Verdict: too-early-to-call on a numeric fair-value range — the peer-multiple read below is the honest substitute (see the DCF-timing note further down). Bottom line: the valuation re-rating that began in Q1 2023 continued this quarter, driven by both a further stock-price gain and continued fundamental acceleration - two consecutive quarters of multiple expansion after five straight quarters of compression through 2022.
With 365.18 million Class A and 27.47 million Class B shares outstanding (392.65 million total, per the balance sheet as of June 30, 2023) and no funded debt:
| Market cap → enterprise value | Q2 2023 (period-end) |
|---|---|
| Share price (period-end, June 30, 2023 close) | $76.42 |
| Shares outstanding (Class A + B) | 392.65 million |
| Market capitalization | ~$30.0 billion |
| Less: cash and marketable securities | $3.84 billion |
| Funded debt | none |
| Enterprise value | ~$26.2 billion |
| Peer-multiple sanity check (TTM basis) | Q1 2023 | Q2 2023 | Change |
|---|---|---|---|
| TTM Revenue | $7,162M | $7,687M | ✅ up |
| TTM Adjusted EBITDA | $511M | $687M | ✅ up |
| TTM Marketplace GOV | $56,974M | $60,361M | ✅ up |
| Enterprise value | ~$21.1 billion | ~$26.2 billion | ✅ up |
| EV/Revenue» | ~2.9x | ~3.4x | ✅ up |
| EV/Marketplace GOV (TTM) | ~0.37x | ~0.43x | ✅ up |
| EV/Adjusted EBITDA» (TTM) | ~41x | ~38x | ⚠️ down |
TTM figures are computed as FY2022 minus the first half of 2022 plus the first half of 2023 (revenue: $6,583M − $3,064M + $4,168M = $7,687M; Adjusted EBITDA: $361M − $157M + $483M = $687M, using $54M+$103M=$157M for H1 2022 and $204M+$279M=$483M for H1 2023; Marketplace GOV: $53,414M − $25,434M + $32,381M = $60,361M). EV/Revenue and EV/GOV both expanded because the 24% enterprise-value gain outpaced TTM revenue growth (7%) and TTM GOV growth (6%), while EV/Adjusted EBITDA actually compressed slightly because TTM Adjusted EBITDA grew 34% - faster than the enterprise value - meaning on the profitability measure DoorDash is arguably getting somewhat cheaper even as the headline revenue and GOV multiples expand.
A full DCF still isn't attempted here: two strong quarters running is a meaningfully better base than one, but the buyback's imminent exhaustion (and uncertainty about what replaces it) plus the reopened Proposition 22 legal question both introduce near-term variables that would need resolving before a multi-year model could be built with real confidence. The peer-multiple read remains the more honest tool, and it now shows two consecutive quarters of re-rating following five quarters of compression through all of 2022.
DoorDash, Inc.'s Quarterly Report on Form 10-Q for the quarter ended June 30, 2023, filed with the SEC in August 2023.