DoorDash, Inc. (DASH) Q4 2022 Earnings Call Transcript

DoorDash, Inc. (NYSE:DASH) Q4 2022 Earnings Conference Call February 16, 2023 5:00 PM ET

Company Participants

Andy Hargreaves – Vice President- Finance and Investor Relations

Tony Xu – Co-Founder, Chair and Chief Executive Officer

Prabir Adarkar – Chief Financial Officer, Incoming President and Chief Operating Officer

Ravi Inukonda – Vice President-Finance and Strategy and our Incoming Chief Financial Officer

Conference Call Participants

Deepak Mathivanan – Wolfe Research

Brian Nowak – Morgan Stanley

Eric Sheridan – Goldman Sachs

Lloyd Walmsley – UBS

Michael McGovern – Bank of America

Nikhil Devnani – Bernstein

Bernie McTernan – Needham

Doug Anmuth – JPMorgan

Michael Morton – SVB

Brian Fitzgerald – Wells Fargo

Youssef Squali – Truist Securities

Andrew Boone – JMP Securities

Steven Fox – Fox Advisors

Ron Josey – Citi

Brad Erickson – RBC

Operator

Good afternoon. My name is Emma, and I will be your conference operator today. At this time, I would like to welcome everyone to the DoorDash Fourth Quarter 2022 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] Thank you.

Andy Hargreaves, you may begin your conference.

Andy Hargreaves

Thank you, Emma. Good afternoon, and thanks for joining us for our fourth quarter and full year 2022 earnings call. I'm very pleased today to be joined by Co-Founder, Chair and CEO, Tony Xu; CFO and incoming President and COO, Prabir Adarkar; and VP of Finance and Strategy and our incoming CFO, Ravi Inukonda.

We'll be making forward-looking statements during today's call including our expectations for our business, financial position, operating performance, our market, guidance, strategies, our investment approach and the consumer spending environment. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those described. Many of these uncertainties are described 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 measures, including a reconciliation of such non-GAAP measures to the most directly comparable GAAP financial measures may be found in our letter to shareholders, 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 is being audio webcast on our IR website. An audio replay of the call will be available on our website shortly after the call ends.

With that, I will pass it to Tony for some brief remarks, and then we'll go into questions. Tony?

Tony Xu

Thanks, Andy. Hi, everyone. Thanks for joining us today. Typically, we just dive right into Q&A. But for today's call, I wanted to say a few words at the top about Christopher, Prabir and Ravi. I'm sure many of you have seen the news that we're naming Prabir, President and Chief Operating Officer, and Ravi as CFO as Christopher retires from operating roles and day-to-day management. In his seven-plus years here, Christopher, or CP as we call him internally, has helped to shape our business and our culture. He infused an operator mindset across the company and coached an entire generation of our leaders. On a personal level, I will miss him. I've learned so much from him and consider myself lucky to count him as a business partner and friend. Today's news is a chance to celebrate CP's 33 incredible years as an operator and what he has helped us build. It also shows the strength of our systems and the amazing team we have built at DoorDash. Prabir and Ravi have been with us for more than four years and have mastered every aspect of our business. Both are without equal in this space, and I'm excited for what they'll achieve and what we'll continue building together.

Over our near 10-year history, DoorDash has been fortunate to have had a remarkably stable and high-quality leadership team. Nonetheless, everyone in our team has a succession plan. We knew that CP wouldn't always be here, and we've been ready for this possibility for some time. And we're always developing our bench of talent as well as our systems and processes so that the right people can step up when ready. We operate in a very complicated and dynamic space, and the understanding of nuance and the ability to translate this intuition into pragmatic judgment takes time. We're lucky that we have two people who've been grooming for a while and a group of operators behind them to continue executing with excellence without skipping a beat. Prabir and Ravi are also excellent stewards of our unique culture. Again, I want to thank CP for everything he's done and congratulate both Prabir and Ravi. I'm super excited for what's ahead because as CP likes to say, we're just getting started.

With that, I'll turn it back over to Andy, and let's get started with your questions.

Andy Hargreaves

Emma, we can go to questions now. Take the first question please.

Question-and-Answer Session

Operator

Thank you. [Operator Instructions] Your first question comes from the line of Deepak Mathivanan with Wolfe Research. Your line is now open.

Deepak Mathivanan

Great, thanks for taking the question. So a couple of questions. First, Tony, the guidance paragraph in your press release noted ongoing significant investments reflected in the outlook. Can you update us on what the largest areas of incremental investments planned for 2023 are, which businesses started getting additional capital and are showing promising what growth and scaling potential?

And then second one for Prabir. Congrats on the new roles. There's definitely some uncertainties around potential regulation in markets like New York City. I know the proposal is delayed until sort of the end of the month. But how are you thinking about the impact on your business currently? And kind of what have you factored into the preliminary 2023 outlook? Thank you so much.

Tony Xu

Hey Deepak, I'll take a stab at both of those questions. And feel free, others, to chime in. I think your first question was really just around how we were thinking about our capital allocation. To start, I think, it's important to just level set on our philosophy for investing, which has stayed the same ever since we've been a public company and really has been the same since day one in building DoorDash, which is our goal is to maximize long-term profit dollars. And so that both has a scale component to it as well as a unit economics component to it. And to me, both of them are very important and it's most important to get the sequencing right so that we are allocating capital in the most efficient ways.

So, when you look at this allocation for whether it's 2023 or in the years to come, a lot of the investment is going towards in building our categories beyond restaurants, both in the United States as well as globally, as well as our operations outside of the U.S. as we're now live in 26 countries. I mean, I think it's been remarkable, the progress that we've seen so far in both the share gains, as well as just the level of product market fit that we've achieved in both of these dimensions. With new categories, we're now the largest platform with the most amount of partners outside of restaurants in North America. We've gained share in the majority of our international markets.

And our Vault business overseas in Europe is growing much faster than peers. And so we're seeing a lot of progress there, and we're doubling on that momentum. At the same time, we're very observant about our unit economics. And a lot of that progression is reflected in some of the guidance that we shared for 2023, but also in what we expect to see on a go-forward basis as we continue to improve the efficiency of our operations in addition to the quality of our product level. Anyone else wants to add on the first question?

Prabir Adarkar

Yes. Tony, it's Prabir. Maybe I'll add a little bit, and then Ravi can take the New York City question. Deepak, I mean, Tony alluded to the strategy to continue investing behind building out on new categories as well as international. We put up significant proof points that are quite encouraging in terms of our progress in building scale.

So just a couple of data points. Last quarter, we had said our U.S. convenience and grocery business, this was in Q3, had GOV growth of over 80%. That business grew 60% year-on-year in Q4, so it still continues to grow at meaningfully higher growth rates compared to the restaurants. Our third-party U.S. grocery business grew 100% year-on-year, both in Q3 and Q4.

And in Wolt, as we alluded to in our shareholder letter, on a constant currency basis has grown 50% year-on-year, which is again significantly faster than its European peers. And so I take this as positive proof points in terms of not just product market fit, but our ability to drive scale on the platform.

In addition, we've got proof points of continued improvement in unit economics. So we talked about a third-party convenience business. In fact, earlier in 2022, we said it would get to breakeven on a variable profit basis in 2022. In Q4, we did exactly what we said we were going to do. We got to variable profit breakeven. Our third-party grocery business continues to improve its margins.

So to be clear, we have a long way to go. But as we continue to improve the products and the part experience, we believe we will continue to drive outsized growth in all of these areas that we're investing behind and continued margin improvement.

Ravi, do you want to take the New York City question?

Ravi Inukonda

Yes. Thanks, Prabir. Thanks, Deepak, for the question. On the New York City impact, we've been thinking about this for a while now. The impact from a cost perspective is included in our EBITDA guidance going forward. We actually have a number of levers from an operational perspective that we can put in place, including passing on any fees to our audiences to ensure that we can meet our profitability expectations.

Deepak Mathivanan

Got it. Thank you so much for the answers. Really appreciate it.

Operator

Your next question comes from the line of Brian Nowak with Morgan Stanley. Your line is now open.

Brian Nowak

Thanks for taking my questions, may be two. The first one on the DashPass member number, another strong quarter period of growth. Can you just talk a little bit about the biggest drivers of that DashPass adoption growth? And any update on spend per member across the DashPassers? And the second one is just sort of look at the 2023 guidance. Can you just sort of give us a little – any breakdown at all how we think about the GOV and the EBITDA from the core U.S. restaurant business as opposed to all the emerging faster-growing businesses in the two pieces?

Prabir Adarkar

Yes. Maybe I'll start on the DashPass question, Brian, and Ravi can chime in on the 2023 guidance question in terms of what's driving the growth there. Really, look, the DashPass growth has been remarkably consistent over the course of this past year. We exited 2021 with 10 million subscribers. We're exiting this year with 15 million. And that – the pace of that growth has been consistent despite a variety of competitor offerings from both of our competitors in the space. And what that goes to is just evidence, to me at least, that the combination of selection, price and quality that we offer through our program is resonating with customers.

In terms of what's driving the growth, it's not been partnership-driven as some of our competitors might be. That's a competitive strategy that others are using. The majority of our growth, at least as far as the DashPass program goes, is from our own channels as well as through traditional performance marketing channels. So these are – it's not partnership-driven. These are organic channels that ultimately drive that we've seen in the product.

Second, the pace continues pretty consistently, and so there's a lot of room to grow. If you think about the size of the DashPass program at 15 million subs, it's still a far cry from other programs, whether it's the number of Netflix members or Prime subscribers, there's a lot of room for us to continue growing. And we're happy with the pace of growth historically, and we're not seeing any signs of that slowing down.

Ravi Inukonda

Thanks, Prabir. Let me take the question on the guide. We are not breaking out any specifics, but our U.S. restaurant business is the largest business, and it's going to be the major driver both on the top line as well as the bottom line. As we talked about in the shareholder letter, we do expect to increase margins, both from our U.S. restaurants as well as all of our investment areas going into 2023.

Brian Nowak

Great, thank you both.

Operator

Your next question comes from the line of Eric Sheridan with Goldman Sachs. Your line is now open.

Eric Sheridan

Thanks so much for taking the question. Maybe if I could focus on Wolt. Can you talk a little bit in terms of multipart on elements of the subscription base of Wolt? And what is an opportunity set there as well as some of the competitive dynamic and how you've stated in investment mode in Walt? And what's that meant for a mixture of growth and possibly taking market share in some of those key markets for Wolt?

Tony Xu

Hey Eric, it's Tony. I'll get started, and others can chime in. I think the thesis for Wolt has remained remarkably consistent. When we met the team two years ago, we were first struck by how similar we were as operators and how we thought about just building businesses. But at the same time, what we were really impressed by from a business perspective was just the superior level of retention and order frequency it had achieved with its product relative to peers.

And I think that remains to be what we've seen today in the data as we've now been partners for a couple of years now, where you just see the constant progression of its outperformance on a relative basis. And it's just coming from those cohorts getting larger that retain at higher levels who order and engage more often. That, effectively, the geometric sequence of growth that is what you're seeing on a relative basis.

It actually isn't that much yet attributed to its subscription products or anything else, which actually lends to its future potential. I mean there's a couple of things that we're pretty excited about. One is just how under-penetrated it is in most of its geographies. And even its most mature established markets, Wolt actually serves a fraction of the actual population. And second, to the premise of the question, there are quite a lot of products that Wolt hasn't yet introduced. And in most of these markets, I think there also doesn't really exist that much e-commerce in terms of its behavior relative to some of what you see here in the United States, and so I think there's a lot of opportunity across a variety of vectors for growth.

Prabir Adarkar

And just on the competitive dynamic question. I mean you asked the question on market share. Your third-party data, particularly in some of the countries where Wolt operates, isn't clean. But if you just simply look at their constant currency growth rate of 50% and you compare it to the European peers or European divisions of more global peers, the Wolt business is growing significantly faster. So to me, that suggests market share gains despite the fact that we don’t have precise third-party data to back that up.

Operator

Your next question comes from the line of Lloyd Walmsley with UBS. Your line is now open.

Lloyd Walmsley

Thanks. Kind of try to bundle a few into one. You’ve historically talked about your guidance philosophy being you give a range, you’re not really targeting like beat the high end or hit the high end. It’s more a function of, are there things to invest in that look compelling.

And if you find things to invest, right, you don’t end up hitting the high end. Is that still the way that you guys think about guidance philosophy? And how do we think about the growth opportunities you see perhaps into 2023 versus prior years, especially as you kind of get more comfortable with Wolt in a few markets? Thanks.

Prabir Adarkar

Hey Lloyd, I mean on the question of guidance philosophy, the way we guide and the way we run the business, I mean none of that’s changed, right? And we’ve said historically, the way we run the business is try to maximize scale and put as much on the top line as possible. The – and we’re investing in that regard in order to maximize scale.

Now as far as the EBITDA guidance goes, the guidance range is really meant to create a sense of discipline so that we ensure we can try to follow within the range. Now precisely where we fall, it depends on the exact investment opportunities available and their returns versus our expectations.

And so to the extent, as you pointed out, investments are available, and we like the returns to our payback thresholds, we will invest. In recent times, what we’ve seen as we’ve outperformed on the top line, whether there’s been strength in consumer metrics, you’ve seen our MAU metrics, you’ve seen our DashPass numbers that has contributed to incremental top line, that has helped us get closer to the top end of the EBITDA range despite a healthy level of investment.

So that’s just to clarify where we’ve landed in the range, but the objective, A, philosophy has not changed in terms of how we manage the business and invest for growth. And then B, our objective is not to try to beat the EBITDA range to retire land within it.

Operator

Your next question comes from the line of Michael McGovern with Bank of America. Your line is now open.

Michael McGovern

Hey guys, thanks so much for taking the question. I recall back earlier in 2022, you gave a number that you had 80,000 net new restaurants and merchants I think in Q2. And I was curious, how that’s tracking at this point as we get into more potentially recessionary environment? And do you have kind of an underlying assumption for how that will track in 2023? I guess how important is it to continue to drive new restaurant and merchant sign-ups? Thank you.

Tony Xu

Yes. Hey Michael, so we’ve continued to see growth in the selection on the platform, and that’s true both for restaurants, and that’s also true for non-restaurants. Actually, I’d say there’s kind of a confluence of two external factors in addition to just, I think the team’s great execution, which is, one, you just see more and more physical retailers digitizing their entire business, which both is a tailwind to our marketplace of joining the marketplace for the first time. I mean if you looked at some of the brands that we onboarded in 2022, a lot of that even diversified beyond restaurants into the grocery sector with additions like Sprouts or Raley's.

We announced all these earlier this year. Then you have additions in the retail category, whether it be Sephora or DICK’S Sporting Goods. So a lot of these retailers are digitizing more of their business and coming online to get that incremental business from the largest local commerce marketplace.

The second kind of thing that’s happening is the fact that because they’re trying to digitize their entire operations at these retailers, they are also partnering with our platform products as well, products like DoorDash Drive, DoorDash Storefronts, where they’re trying to run more of their business in a fashion that both I think takes advantage of the convenience economy, but also I think, just creates a better business model for themselves, right, where they can make more productive use of their square footage by adding more and more sales into a fixed space. And so that’s what we’re seeing. We’re seeing the quite a lot of additions, non-stop, candidly, both on the restaurant side as well as on the non-restaurant front.

Prabir Adarkar

And Mike, just one technical point is that one of the five restaurants goes out of business each year, right? So there’s – this is a moving target. There’s constantly new restaurants that are appearing that we need to make sure we’re staying ahead of. And so the sales team is always busy, and they’re always putting up bigger and bigger targets in order to make sure that the selection that’s available on our platform is fresh.

Michael McGovern

Got it. Thank you.

Operator

Your next question comes from the line of Nikhil Devnani with Bernstein. Your line is now open.

Nikhil Devnani

Hey, there. Thanks for taking my question. I had a couple, please. So in the S-1, you provided some really helpful disclosure around contribution margins expanding for mature cohorts. Since then, there’s been some changes: labor, regulatory. But also kind of you scaled up more, you have more subscribers today. Just wondering if that 8% threshold that those cohorts got to, is that still the right way to think about kind of mature cohort profitability for the business today? And then I had a separate question on new verticals. Are they acting as a new customer acquisition channel? Or is it more a function of engaging the existing customer base? Thanks.

Prabir Adarkar

Nikhil, maybe I’ll take the first one. The cohort level margins, they’re healthy and they’re progressing well. We showed you last quarter the total contribution profit for the U.S. restaurant business, which is essentially the aggregated performance of all the cohorts. And so if you take a step back, the contribution profit of our core business has consistently improved over the past few years, despite post-COVID reopening, despite Prop 22, which is a regulatory shop the system inflation and other things, and this is really the output of this focus on improving the efficiency of our logistics network, improving our defect rates and so on.

And so we could – the purpose of that disclosure was to try to provide a simplified view of the progression that we have seen to the cohort margins but on an aggregated basis and to give you a sense of the incremental margins we are seeing in the U.S. restaurant business that are in line with what we’ve said historically. And can you remind me of the second question, please?

Nikhil Devnani

Yes, sure. Just on the new verticals, are they acting as a channel for new customer acquisition altogether? Or is it more about engaging the customers you already have?

Prabir Adarkar

I got it. Yes, yes. So it’s two things. So it’s strategically important for two purposes. First, we see a growing number of new customers starting with non-restaurant categories. So yes, it is a source of customer acquisition because there might be customers out there that didn’t find the restaurant they were looking for. And now they find DoorDash interesting because their favorite grocery store, their favorite convenience store is on the platform. So yes, a growing number of new customers start their journey with DoorDash with the new – with the non-restaurant categories.

Second, at least – and this is based on early signals, the work we’ve done at least so far, preliminary seems to suggest that customers who order from both restaurants and non-restaurant categories have an increase in their order rate, which is the product of retention and order frequency compared to those that are single categories. So both of these things are important reasons for us to continue building a multi-category in order to be all things local commerce for our cities.

And the last point I’ll make is, we’re seeing increasing adoption of our new verticals amongst our MAU base. So we’ve said in Q4 last year, 14% of our MAUs had purchased from non-restaurant categories. That number in Q4 this year was 17%. So we’re seeing steady growth, which is increased adoption in a larger base year-on-year of revenues.

Nikhil Devnani

Thanks, Prabir. That’s helpful.

Operator

Your next question comes from the line of Bernie McTernan with Needham. Your line is now open.

Bernie McTernan

Great. Thank you for taking the questions. I guess, maybe just a clarification. I just want to make sure I got – you’re right, Prabir, you said 15 million DashPass subscribers at the end of the quarter, that would be similar – or against the 10 million last year. And then if you could just discuss the payback period on those subs and if the cost to acquire them has been consistent over the last year or two.

Prabir Adarkar

Yes. So first question, yes, 15 million is right. So 10 million at the end of 2021, increased to over 15 million at the end of 2022. Payback period, we’ve not disclosed. We continue to run efficiently. Those payback periods have actually not materially different this year than they were earlier on in the year. So if what you’re asking me is has competitor cross-selling bundles made it harder for us to acquire DashPass subscribers, we haven’t seen any noticeable impact so far. I think I said earlier, the pace of DashPass subscriber growth has been relatively consistent each quarter. And on top of that, we track the number of new customers that joined the industry. Our share of new customers joining the industry has been consistent this past year. In fact, has actually increased towards the back half of this year. And so both of these data points give me comfort that we haven’t seen any noticeable impact from any cross-selling.

Bernie McTernan

Great. Thank you.

Operator

Your next question comes from the line of Doug Anmuth with JPMorgan. Your line is now open.

Doug Anmuth

Thanks for taking my question. I just had a couple about the 2023 outlook. I was hoping you could talk a little bit more about APIs and kind of how you see them evolving across AOB and frequency. And I guess, in particular, on [indiscernible] and some others just about open funds. And then secondly, can you talk about gross margins a little bit, some of the tailwinds and perhaps heading in for next year? And do you need that to expand your higher EBITDA margin? Thank you.

Ravi Inukonda

This is Ravi. Let me take the question. On the first piece, on the 2023 guidance itself, in terms of KPIs, our goal is to continue to drive both monthly active users as well as order frequency. We continue to see strong signals in our retention, which has stabilized over the last several months. Newer cohorts continue to come in at order frequency, higher than what we’ve seen earlier in the year. Now to your second point, can you repeat your second question?

Doug Anmuth

Some of the gross margin puts and takes and do you need that to expand and drive EBITDA margin expansion.

Ravi Inukonda

Yes. On the gross margin piece itself, if you actually break apart the gross margin, core DoorDash gross margin, excluding Wolt actually increased on a year-on-year basis. That was driven by improvements in DASH or cost as a percentage of GOV as well as credits and refunds. Some part of that was offset by the higher insurance costs that we’ve seen in the business. On a consolidated basis, gross margin declined because of mix shift towards the Wolt. Looking ahead in 2023, we do expect gross margin to be higher than Q4 levels.

Doug Anmuth

Great. Thank you.

Operator

Your next question comes from the line of Michael Morton with SVB. Your line is now open.

Michael Morton

Thank you for question. A question on new vertical businesses. If you look at something like package pickup, it suggests that the time-sensitive nature you face in core restaurants could be lower, right, and maybe higher levels of batching. So I was wondering if you could speak to any of the early demand trends. And then unit economics you’re seeing on some of these new verticals like package pickups compared to prior new verticals. And then just lastly, maybe any update on non-restaurant GOV growth would be great if you could. Thank you.

Tony Xu

Yes, sure. Maybe I can take the – it’s Tony. I can take the first part of the question. And someone can answer, I think, the growth rate question, which we disclosed before. So, on the package piece, I mean we’re obviously very excited about what we can build. Let me think about it. We have 3 million Dashers that come to the platform every 90 days. And we have the most sophisticated logistics systems for last mile. And when I think about the opportunity, it’s quite immense just because most last-mile systems were built during the time when, frankly, there wasn’t e-commerce, right, which means that a lot of the setup isn’t really well suited for doing true last-mile deliveries.

And that’s actually why we think there’s quite a lot that we can do that if we can deliver ice cream in 10 minutes or pizza in a similar period of time, we can certainly deliver something that is less perishable with greater time. And to your point, there’s lots of opportunities to make the logistics really efficient. So we’re quite excited about what this can be. I do think that, over time, in addition to becoming the largest local commerce marketplace, we’ll also be the last mile infrastructure in most cities globally.

It’s just going to take quite a lot of time to get there. And the package piece is seeing quite a lot of demand. But it’s pretty early, I would say, in terms of how it works. And so I think it really is a good example of how we try to solve customer problems at DoorDash. A lot of why we got into that business was really seeing some of the requests from customers come in to support and then acting upon it and running an experiment and then seeing if we can actually build a product that customers love, and then we’ll actually consider the scaling afterwards. And so it’s still in the period of finding and achieving product market fit. That’s really where that experiment is right now. But we have many of these experiments across the Board at DoorDash, and that’s one of the reasons why it’s so fun to work here.

Prabir Adarkar

Yes. And on your question on new categories growth, I think I mentioned this earlier in the call and I’ll reiterated our U.S. convenience and grocery business grew roughly 60% year-on-year in Q4. Our U.S. grocery business grew roughly 100% year-on-year in Q4, and then our Wolt business grew 50% on a constant currency basis. Again, these are attractive growth rates that we’re happy to post.

Michael Morton

Thank you so much.

Operator

Your next question comes from the line of Brian Fitzgerald with Wells Fargo. Your line is now open.

Brian Fitzgerald

Thanks. Maybe a related question, Tony, you have large and growing lakes [ph] and data sets, which is maybe the most important driver of AI and machine learning models and then certainly front end center in the press nowadays. I want to know if you could talk a little bit about how you think these processes impact your business and how you leverage them on a daily basis.

Tony Xu

Yes, it’s a great question. Like look, there’s – I’m actually really glad that AI is having its kind of mainstream moments these days, and I think there is quite a lot of potential here. And I do think a lot of it is actually couched in the way that you described it, which is the importance of the data and taking that data into – translate it into pragmatic products that actually solve customer problems, right? Like that’s kind of the key. And so for us, we’ve actually been working with different AI in each of our products, probably for the last three years or four years now. Some of it you see in the ranking and the recommendations product we use with consumers.

A lot of it you see behind the scenes with logistics. You see that now also in our support products. I mean it’s really getting used across the board in other words. I think it’s very hard when I think you’re at the precipice of a technology to figure out the exact application in which it’s going to really realize the technology’s full potential. But we certainly see all of these benefits give small improvements that then compound over time. And when you’re at the scale that we’ve achieved in our business lines, it really adds up. And so I really think that this is going to be a big push for us on a go-forward basis or a continued big push, I should say, on a go-forward basis, and it’s something I’m super excited about.

Operator

Your next question comes from the line of Youssef Squali with Truist Securities. Your line is now open.

Youssef Squali

Great. Thank you very much and Prabir and Ravi, congrats. So, I guess a two-part question. One, the macro around the consumer seems to be a bit wobbly right now between a strong employment and dwindling balance sheet. I was wondering if maybe you can comment on what you’ve seen so far in January and February. I know you’ve already guided, and the guide looks really good. But if I look at the guide for the year, it seems like you’re not really assuming much of an improvement Q1 to Q4, at least from a GOV standpoint. So maybe can you just address what you’re seeing right now and kind of what you’re baking in terms of your guide for the rest of the year in terms of sequential growth?

Ravi Inukonda

Cool, let me take this one. If you look at our results, we have consistently driven double-digit growth rate in GOV over the last seven quarters. In fact, our revenue is actually outpacing our GOV growth rate. When you look at the core consumer input metrics, we’re just coming off of a record quarter in terms of monthly active users as well as DashPass subscribers. I think what we’re seeing in the business is order frequency of the newer cohorts continues to be higher than the older cohorts. Retention of our newer cohorts has been pretty stable for the last several months. To your question on Q1 itself, it’s off to a great start. We are seeing continued share gains since the beginning of the year, and that’s what’s baked into our guidance for the rest of the year as well.

Prabir Adarkar

And just to add on the full year comment users, it’s Prabir, I mean look, as Ravi said, we’ve got – we’re seeing strong consumer metrics currently, right, both in Q4 and strength of the Q1. And so you’ve got high visibility into the first half of the year, which is why you’ve seen a strong Q1 guide. For the full year, particularly as you talk about the second half, there’s uncertainty around macro issues, and we’re trying to bake in that uncertainty now full year outlook because it’s not about a lack of confidence in the fundamentals, it’s about uncertainty on the macro conditions.

Youssef Squali

Yes. Super helpful. Thanks, Prabir.

Operator

Your next question comes from the line of Andrew Boone with JMP Securities. Your line is now open.

Andrew Boone

Thanks so much for taking my questions. Two please. Delivery Hero has made significant investments in its one piece convenience [ph] product. Can you also apply the investments of Hero [ph] one piece convenience product? And then secondly on corporate, the significant opportunity can just update your progress in terms of making more corporate relationships and office ordering? Thanks so much.

Tony Xu

Can you repeat the second question? Sorry. It was [indiscernible].

Andrew Boone

I’m thinking about the old seamless opportunity with corporate just having a more of a corporate relationship and office ordering as more people are back in office.

Tony Xu

Yes. I can take both of those questions. It’s Tony. So I think the first question was around DashMarts. So we haven’t broken out the investment piece behind – the investment budget for DashMarts. But here’s kind of how I’ve thought about DashMarts, which is first I think it’s important to acknowledge that it’s not a standalone product, right? It’s a feature built on top of the largest local commerce marketplace that has the most number of consumers who are the most engaged and also the most number of Dashers, none of whom we have to reacquire. The second comment – which makes just much more capital efficient from an investment perspective relative to a standalone effort.

The second comment I’d make here is really the purpose behind the investment. So if you think about where non-restaurant delivery is today, things like grocery delivery, take as an example, it really hasn’t achieved the full potential of what we believe the category could become. I mean, at the end of the day, the customers looking to get everything they ordered inside their cart. They’re looking for it at prices that are relatively the same as what they would expect to pay in store. And obviously they expect the delivery with greater convenience than if they were to do it on their own.

But today, that’s not what the current day products offer. But at the same time, we have to make sure that we can work together with retailers to bridge both the short-term challenges of working with third party retail infrastructure that isn’t optimized, nor was it designed for delivery and create and invent a new model in which we can co-create with retailers such that we can move the industry forward and actually solve these customer problems to achieve the full potential of grocery delivery or non-restaurant delivery.

And so that’s really the purpose. And we’ve found quite a lot of different use cases once you’ve actually master the basics of retail, which we’re still learning how to do. And we’re only about 18 months into the effort, but we really like what we see. And – but I think it’s important to understand just from a capital efficiency perspective, how different it is relative to doing it on a standalone basis.

And I think your second question was around corporate orders. I agree, I mean, I think that obviously it took a bit of a hiatus during the onset of the COVID-19 pandemic where obviously, offices were shut down and people were less confident about how work would be done and so on and so forth. And that’s actually when a lot of our team was able to very quickly pivot into building products that would actually solve for workers at home as all of us kind of got more accustomed to the idea of working remotely or not in the office, especially now as people are getting back into the office. And I think things have stabilized effectively in this post COVID world. I definitely think that’s a big opportunity moving forward.

Andrew Boone

Thank you.

Operator

Your next question comes from the line of Steven Fox with Fox Advisors. Your line is now open.

Steven Fox

Couple questions. First, you mentioned in the letter how you’re managing for better affordability with your customers. Can you talk a little bit more about that and whether that brings you under like an inflation curve we would think of broadly or how do we think about that going forward? And similar question on, there was a paragraph talking about how you’ve gotten more efficient. Obviously, you’re going to get more efficient this year too on some of the things you mentioned. But like how does that curve look this year versus last year in your minds as it contributes to EBITDA? Thanks.

Tony Xu

Sure. Maybe I’ll take the first part of the question, which I believe was around affordability, and then I’ll let Robbie take the second part on the efficiency side. So on the affordability side, yes, I mean we've – as disclosed in the letter, we've taken down transaction costs for consumers by about 8% in the past year. And we're always trying to drive this down, right? And we're always trying to drive this down as we add selection, improve delivery times, improve the accuracy and the quality of those deliveries. So obviously, we're trying to do more than one thing at the same instance.

But when it comes to affordability, certainly, DashPass has been a big driver of a lot of the affordability gains for our customers especially as we continue to see consistent adds into the DashPass program. But at the same time, we're working on quite a lot of other initiatives as well and to make sure that we can keep making the service more and more affordable. Certainly, we're trying to beat inflation, but hopefully, we can do much better than that, especially as we find more creative ways in delivering more and more value back to consumers.

Ravi Inukonda

Let me take the second one on efficiency. For us, when we think about efficiency, it always starts with improving product quality. When we improve product quality, the retention of the platform goes up, whether it's consumers or dashers. When the retention goes up, we don't have to spend as much on retaining existing consumers and dashers, which drives leverage on our sales and marketing.

The second advantage we have when we improve product quality is the fulfillment cost per order goes down, whether it's support costs, dasher costs or credit refunds. Also, in addition to that, as the product quality goes up, awareness increases, which makes us the ability to acquire consumers and dashers at attractive prices even more attractive. The combination of these three factors is what's driving the efficiency you're seeing in the business. In our belief, there's a lot more room for us to continue to improve product quality, which will further drive efficiency gains. And our goal is to reinvest that efficiency back into driving scale in the business, and some of the efficiency gains that you see are included in our EBITDA guidance going forward.

Steven Fox

Great. That's very helpful. Thank you.

Operator

Your next question comes from the line of Ron Josey with Citi. Your line is now open.

Ron Josey

Great. Thanks for taking the question. Prabir, congrats on the promotion as President; and Ravi in your new role. I wanted to maybe follow up for Prabir, I think I heard you say 3P [ph] grocery was up 100% in 4Q. I think that's the same growth rate as in 3Q. So talk to us about how the use case is evolving here. Is Grocery and DoorDash primarily still top off? Are you getting Sunday orders? Any insights there would be helpful.

And then we're now a few months post the restructuring at the end of November, and so I would love to hear insights on the savings. But perhaps more importantly, just progress operationally around efficiency and while still building and launching new products, how that's going internally? Thank you guys.

Tony Xu

Yes. Maybe let me take – I can start on both of those questions, and then I'll let others add to them. I think so again, on the first part with respect to grocery, yes, it continues to perform and continues to take share. And you're right. I mean the entry into third-party grocery really for DoorDash has been in solving this top-up use case, right, where you can think of it almost as being the express aisle in many ways. And that was a way to familiarize ourselves with consumers as we kind of moved outside of the restaurant category, and I think it was certainly something that worked. I mean you see it in the gains in share, but you also see it in the improving profitability of that business.

At the same instance, we've certainly been working a lot on creating more and more an item-based shopping experience at DoorDash. Now that takes lots of work on the back end around catalog and many things, and I think that's also now showing promise where we can solve both the use case of the top-up, where I think we're quite advantaged with our logistics network as well as just how consumers perceive us, but also the stock-up use case where people are buying bigger and bigger carts for their more staple items. And so we’re now seeing both of these types of use cases, even though we entered the category with more of a top-up use case.

On the second question, I’ll let maybe others chime in on some of the numbers. But from an efficiency perspective, certainly, that was a really painful decision, right? I think it’s helpful to have some context here of how we got there, where over the last three years, the business revenues have grown about 7x, and we were really trying to catch up to that growth, so the headcount grew about 4x. And so we’re playing catch-up, but then we kind of didn’t get it exactly right and kind of got a bit ahead of our skis on the hiring, and so that made certain things a bit cluttered. And certainly, we needed to make sure that we right-sized the organization so that we’re set up great for the future, which we feel very confident about.

From an execution perspective, we actually feel like it’s made us more focused on the most important things. And as a result, by decluttering some of the management layers as well as maybe coordination meetings that were once quite a large cost to the system, we’re getting a lot better. It doesn’t mean we’re perfect. We have many things still to figure out. We’re still building many things as we continue to innovate beyond restaurants, as we expand internationally and as we expand beyond our marketplace and build these platform products. We’re always going to keep investing and invent new products, but we have to do it with a more focused base.

Prabir Adarkar

And on the – Ravi talked about the risk here. I just want to confirm. So yes, in Q3 of last year, Q3 2022 [ph] we said the grocery business has grown over 100%. In Q4, it grew roughly 100%, just shy of 100%. So those numbers are right.

Ravi Inukonda

Just on the leverage itself, yes, we do expect to drive leverage on our operating expenses in 2023, and that’s been included in our EBITDA guidance that we’ve given.

Ron Josey

Thanks, Ravi.

Operator

Your next question comes from the line of Brad Erickson with RBC. Your line is now open.

Brad Erickson

Yes, thanks. Just two follow-ups, I guess. One, on the health of the consumer. You touched on it earlier being I guess, broadly stable. Just curious if you look at Europe, I think some others have commented that may actually be getting better or maybe even accelerating at the moment. Just curious if you’re seeing that too and what you’ve assumed as a trajectory there for the full year guide for Europe.

And then just one clarification on the grocery and convenience. Is there any – the 60% growth you’ve called out, is there any meaningful delta there between the organic growth rate and the 60%? Or are they basically about the same? Thanks.

Prabir Adarkar

So on the first question, we haven’t broken out the Wolt, but we are projecting strong growth for next year. The one caveat I will make Brad is when you look at Q1, Q1 has the Omicron comp issue, which I suspect you’re hearing from other companies as well. Q1 of last year had this spike because of Omicron, and so you’ll see that in the growth rates for Q1 this year. But that doesn’t change our optimism and confidence in the full year outlook for Wolt.

On your second question, I didn’t understand what you meant by organic growth for us. The entirety of our convenience and grocery business, that growth rate is all organic. So, I’m not sure if that’s what you were asking, perhaps I misunderstood the question.

Ravi Inukonda

Just try to add. I think the numbers that we were giving out were just U.S., so that was organic.

Brad Erickson

Got it. Thank you.

Operator

This concludes our Q&A today and for today’s conference call. Thank you so much for attending. You may now disconnect.