DoorDash said on Wednesday it expects to spend more than $50 million in the second quarter on gas price relief for its delivery drivers, a temporary program that it rolled out as fuel costs climbed. The company said the plan is helping keep couriers on the road even as the national average for a gallon of gas stood at $4.53, up 44% from a year ago.
The company said the program, which it announced in March for U.S. and Canadian drivers, is meant to offset a sharp jump in gas prices tied to the Iran war. DoorDash said demand remained strong in the January-March period despite the pressure, with total orders rising 27% to 933 million and revenue climbing 33% to $4.0 billion. Both figures, however, came in below Wall Street forecasts of 954 million orders and $4.15 billion in revenue.
Ravi Inukonda, the company’s finance chief, said DoorDash had to move back some planned spending to make room for the relief effort. The company said it is paying for the program by adjusting investments in other areas, and if it decides to extend the aid, it wants to find offsets. That approach matters because the relief is not a permanent feature of the business, but a response to a sudden jump in fuel costs that could squeeze delivery economics if prices stay elevated.
The quarter also showed the trade-offs behind DoorDash’s growth. Net income fell 5% to $184 million, or 42 cents per share, partly because research and development costs rose 30% from a year earlier. Even so, investors sent the shares up more than 11% in after-hours trading on Wednesday, suggesting the market focused more on the company’s growth and customer demand than on the earnings miss. Tony Xu said the company is still a small part of a much larger market and that, if it keeps improving what it offers, it should be fine.
The report landed a week after Uber announced a deal with Expedia Group that will let users make hotel reservations through the Uber app, a reminder that the fight for consumer attention is widening beyond rides and food delivery. For DoorDash, the next question is how long it can keep underwriting gas price relief without slowing other bets on products and services.
