DOORDASH forecast first-quarter core profit largely below estimates and reported a wider-than-expected quarterly loss on Thursday (Feb 15), signalling higher costs were offsetting the benefits from a surge in delivery orders, sending its shares down 7 per cent in extended trading.

The delivery firm has been grappling with elevated labour costs as well as stiff competition from rivals UberEats and Instacart.

To attract more customers, it has been heavily investing in marketing and expanding out of its core restaurant delivery business to newer categories such as grocery, convenience and alcohol.

DoorDash expects current-quarter adjusted earnings before interest, taxes, depreciation, and amortisation (Ebitda) between US$320 million and US$380 million, mid-point of which is below LSEG estimates of US$355.3 million.

“Expectations for DoorDash may have been a bit inflated on the heels of Uber’s earnings,” said Blake Droesch, an analyst at Insider Intelligence.

DoorDash expects 2024 adjusted Ebitda between US$1.5 billion and US$1.9 billion, the mid-point of which is above expectations of US$1.63 billion, according to LSEG data.

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“We have been able to continue attracting new consumers and driving higher consumer engagement for the simple reason that our service continues to get better,” CEO Tony Xu wrote in a letter to shareholders.

Total orders in the fourth quarter rose 23 per cent to 574 million from a year earlier, but its costs and expenses climbed 9.3 per cent.

The company reported a loss of 39 US cents per share, compared with analysts estimates of a loss of 16 US cents.

It expects 2024 gross order value – a key metric that shows the total value of all app orders and subscription fees – between US$74 billion and US$78 billion, compared with US$66.8 billion in 2023.

The company also authorised up to US$1.1 billion in share repurchases.

Fourth-quarter revenue rose 26.7 per cent to US$2.3 billion, compared with estimates of about US$2.24 billion. REUTERS