Really impressive levels of operating leverage. Just curious if maybe some details of the drivers behind it? Like is this like Dash might be hitting some type of maturity, natural like attrition in the employee base. And like if this is kind of a level we should think about going forward and how operating expenses philosophy could maybe change there? Thank you so much.
Tony Xu: So to your first question, I think I really agree with the premise of the customer research that you did, which is that incrementality obviously, is a huge driver of return on ad spend. And I think that’s why, at least my view and our company’s view on advertising is the most important thing about building a highly incremental advertising business is to build the biggest and most robust marketplace and not to confuse the sequence or the order of operations there. And so when our grocery business is growing more than doubling year-on-year, I think that’s a good start, especially relative to other choices in the marketplace from an advertiser’s perspective. But look, I mean, there’s a lot of work to be done. I think we have a long ways to go in building out our advertising product.
We are super excited about, I think, the growth we’ve seen. We are even more excited about I think the amount of demand that is coming into the ecosystem for a product like ours, where I think they recognize in addition to our growth and especially at our scale, they also see the opportunity across different categories. And so there’s a lot of excitement both from enterprise merchants, whether it’s in the restaurant category or in the non-restaurant categories as well as from advertisers. And so we got a lot of work to do. We are not certainly pleased with where we are with the product that’s usually how we feel about all of our products. But I think we’ve got a lot more to go. Certainly, in advertising, it’s been a 2.5 year effort. I think it’s already amongst, I think, some of the most desired online advertising platforms.
Yes, I think we’ve a very, very long road ahead.
Ravi Inukonda: Mike, on your second point on the efficiency and leverage that you’re seeing in the business. I mean you’re right. I mean really pleased with the performance. Really proud of the team’s execution here. I think what you’re seeing is a combination of a couple of things. One, I mean, look, I mean, Q3 was a really strong quarter for us, not just across the top line, but also across unit economics. Every single line of business has continued to outperform our expectations, both on volume as well as unit economics. A lot of the EBITDA upside that you’re seeing in the business is being driven by that. Two, to your point, we’ve done a lot of things around operating expenses. Operating expenses, as you could see have been relatively flat for the last 4 quarters in a row.
The team has expressed a lot of discipline around the cost structure in general, while we’ve continued to grow revenue north of 25%, 30% over the same time frame. That said, there are also a couple of things that helped us in Q3. There was a one-time sales tax benefit that helped us in Q3 as well as the continuity of leverage that we are seeing across the board. But when I look ahead, our goal is to continue to drive further leverage in the business, whether it’s improvement in unit economics or the fixed cost leverage that you’re seeing in the business. And you can see that in the strong Q4 guide that we’ve given as well.
Operator: Our next question comes from the line of Michael McGovern with Bank of America. Please go ahead.
Michael McGovern: Hey, guys. Thanks for taking my question. Just a couple on the cohort chart. If you look at some of these post-COVID cohorts, it seems as though the slope in trajectory for marketplace GOV is a little bit lower than the steeper slope for pre-COVID cohorts even after the COVID spike. So I’m curious what gives you confidence that you can get the post-COVID cohorts to that same slope in growth? And then also curious what kind of contribution you’re seeing from non-restaurant in the newer cohorts versus older cohorts? Do you see newer users ordering more frequently from non-restaurant? Thank you.
Ravi Inukonda: Yes. Let me take both of those. I’ll start at the cohort chart, right, like the two big takeaways that at least on the cohort chart is one, I actually look at the annual cohorts going as back as 7 years. I mean, every single cohort still continues to grow. And the second one is, if you actually look at the 2023 cohorts, in fact, it’s the second best cohort that we’ve ever had, second only to the Jan ’20 cohort, which obviously had some impact from COVID. What you see in the underlying cohorts is as we are continuing to improve the selection as we are making the quality of the product better as the service levels continue to increase, we are seeing strength across all the cohorts that we operate in. When I look at the newer cohorts from an order frequency perspective, in fact, the newer cohorts are starting out at a higher level than many of the older cohorts are starting out.
And to your second point around what is the contribution from both restaurants as well as new verticals, the behavior that we’ve seen from user base is, the number of users that use both restaurants as well as new verticals, that number continues to increase every single quarter. The impact that’s having on the business is that’s lifting overall engagement of the cohorts up. We are starting to see that in the order frequency for the entire cohort. Again, to be very clear, we are not trying to drive the order frequency of just restaurants or new verticals, the way we think about it is how do we bring more users back, which is helping us drive overall users at a double-digit rate. How do we get them to use the product more, which is what’s being reflected in the overall order frequency going up.
In fact, I mean, we are very pleased with the progress, and this is contributing to the strong growth that you’ve seen over the last couple of years.
Michael McGovern: Got it. Thank you.
Operator: Our next question comes from the line of Andrew Boone with JMP Securities. Please go ahead.
Andrew Boone: Thanks so much for taking my questions. I wanted to go back to operating expenses and specifically sales and marketing. It continues to be very efficient. I understood you guys called out Dasher acquisition costs in the letter. But is there anything you can share on customer acquisition costs just as DoorDash’s awareness continues to be higher? And then for my second question, I wanted to ask about the elasticity of grocery delivery costs. Tony, you’ve mentioned the customer cost out a couple of times in your past responses. What are the largest levers you have to pull to make grocery delivery cheaper for the consumer? Thanks so much.
Ravi Inukonda: Let me take the first one on sales and marketing, and Tony, if you were to take the second one. Yes, you’re right. I mean, we’ve seen a ton of leverage on the sales and marketing in general. One of the biggest areas where we’ve driven a ton of leverage is Dasher. For us, whenever we think about efficiency in the business, it always starts with product. We’ve done a ton on the logistics side over the last couple of years. We’ve redesigned the Dasher app. We have given Dashers the opportunity to both own by time as well as own by effort. The combination of both of those things, what that does is it improves retention, it improves order frequency on the dasher side. We are seeing retention on Dashers go up. We are seeing engagement levels go up.
The effect that’s having on the P&L is we’re seeing leverage on both Dasher pay as well as the Dasher acquisition cost. Second, to your specific point around consumer acquisition, we operate the business to a payback period, we are seeing healthy unit economics. We are seeing the unit economics continue to grow. As long as we are comfortable with the payback period, our goal is to continue to drive new user adoption. In fact, order [ph] was driving the overall growth in MAUs is they’re continuing to see still healthy levels of user acquisition.
Tony Xu: Hey, Andrew, with respect to your second question about lowering the costs of grocery delivery. I mean I think there’s — there are quite a few dimensions. I probably won’t be able to share in much detail about all of the initiatives we are working on. But it starts with, obviously, how do you create the lowest possible cost structure for everybody involved. If you can do that, I think we can all agree that we all have then the choice of to what degree we actually want to lower the cost of the program. And obviously, we always want to continuously lower the cost of the program, so that we can drive greater and greater adoption and engagement in a way that still makes sense for the business, especially when it comes to maximizing total profit dollars in the long run.
