Ladies and gentlemen, thank you for standing by. And welcome to the DoorDash Fourth Quarter Fiscal 2022 (sic) [2021] Earnings Call. All lines have been placed on mute to prevent any background noise. After the speaker’s remarks, there will be question-and-answer session. [Operator Instructions] Thank you. Andy Hargreaves, Vice President of Investor Relations. You may begin your conference.

Thanks. So, hello, everybody, and thanks for joining us for our fourth quarter 2021 earnings call. I am pleased to be joined today by Co-Founder, Chair and CEO, Tony Xu; and CFO, Prabir Adarkar. We’d like to remind everyone that we will be making forward-looking statements during this call, including our expectations of our business, future financial results and guidance, strategy and statements regarding the recently announced acquisition of the Wolt’s transaction result. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those described in forward-looking statements, and some such risks are described in our risk factors, including in our SEC filings, including Form 10-K. You shouldn’t 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 results, including a reconciliation of non-GAAP results to the most directly comparable GAAP financial measures may be found in our Investor Letter, which is available on our IR site. 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 in its entirety is being audio webcast on our Investor Relations website. An audio replay of the call will be available on our website shortly after the call ends. And with that, we can go straight to questions.

[Operator Instructions] Your first question comes from the line of Douglas Anmuth with JPMorgan. Your line is open.

Thanks for taking the question. I know you are focused on maximizing the long-term profit dollars. Just hoping you could provide some more color on how to think about the near-term investment and loss levels in some of the new categories, just relative to the profit and cash generation that you mentioned in the core restaurant business? Thanks.

Hi, Doug. Thanks for the question. Yes. That’s right. We are focused on maximizing scale and the reason for that is because we operate in very large categories that are underpenetrated today. What I will say is, we are not breaking out the margins of the investments in our new categories other than to say that the U.S. business is growing nicely and has an increase in contribution margins, both on a quarter-on-quarter and a year-on-year basis. So that increase in profit is what we are funding into these investments and we are watching for core signals around retention and order frequency to make sure that they hit our term thresholds.

Okay. Thank you.

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

Great. Thank you very much. Two questions from me, please. One, did you guys see any benefits from Omicron during the quarter and how has January and early February trended versus your expectations? And second, can you maybe speak to recent trends in the competitive landscape and do you believe as your main competitor has been talking about that you guys may have lost some share in the U.S., and if so, maybe just kind of if you can flesh that out for us in terms of geos and product types where you feel you need to maybe regain some share? Thank you.

So maybe I will start the Omicron question, and then, Tony, can chime in with the competitive landscape. On Omicron specifically, the impact in Q4, even January, it’s been relatively muted, it’s not significant that I would call it out, and certainly, not significant when compared to the impact we saw from COVID in early in Q2. In fact, with every sort of successive variant, the impact on our business has basically diminished and so the Q4 outperformance, I wouldn’t attribute that to Omicron. And Tony, if you want to comment on the competitive landscape.

Yeah. Hey, Youssef. We actually haven’t noticed any share loss in any time period recently in the fourth quarter or for the year of 2021. And I think when you think about maybe why this is, it really just breaks out into, I think, basic math, right? On new customers, we continue to be the leading acquirer of all customers that come into the industry for the first time. And then when you think about the possibility of new customer acquisition, especially just given how deep some of these channels are, they are really deeper than any other possible channel in which you can acquire new customers into the industry. I think the second part of how you can gain share certainly is, just what is the retention and order frequency of these customers, and we continue to have leading retention and order frequency in the category. And this has always been our focus, by the way, which is to make sure that we build the best product, which you can see as demonstrated through these leading both new customer acquisition, as well as retention metrics. And as a result, when I think about just this ties a little bit to, I think, the previous question that Doug was asking, just how large the core business opportunity is in U.S. restaurants, the fact that even as the share leader and continuing to be the fastest-growing part of the industry, we are only 5% of U.S. industry sales. And I think when you look at all of our active users, while we had a record quarter of 25 million monthly active consumers we are a single-digit percentage of the populations that we serve, and certainly, as you start adding into some of these new categories, as well as international geographies and there is a plus one side of what we do with products like driving store front. I mean, we are a tiny, tiny, tiny fraction of the opportunity in front of us and that’s why we are very excited in investing. But that said, in terms of how we view the future, besides staying disciplined in terms of how we make investments, it’s -- first and foremost, starts with making sure that we have the best product, which is going to offer the best combination of selection, quality, affordability and service, and so long as we continue doing that, I think, the scoreboard will continue taking care of itself.

And just to add to Tony’s point, Youssef, to answer your question directly, over the last 12 months, we have gained 2 points of share, over 2 points of share on our third-party data sources. And specifically, with respect to Q4, we believe we have gained share as we move faster than our peers based on their publicly reported numbers for their U.S. businesses.

Great. Thanks for the color.

Your next question comes from Ross Sandler with Barclays. Your line is open.

Hey, guys. Two questions. So is there anything unique about the experience thus far in Canada and Australia that gives you confidence that once Wolt comes into the fray that you will be able to run the same playbook successfully? I think there’s some skepticism in the investment community that, what you see in the U.S. is replicable in the international countries. So maybe just talk a little bit about that. And then, Prabir, your sales and marketing expense was actually down a bit quarter-on-quarter in contrast to GOV being up nicely. So I think the letter mentioned customer acquisition being a little bit more efficient. Can you just elaborate a little bit on that? Is that some of that retention you are talking about kicking in or anything else on marketing efficiency? Thanks a lot.

Yeah. Why don’t I take the first question on some of our performance and progress internationally and then I will have Prabir take the second question on the sales and marketing expenses. With respect to our international progress, I mean, we are super excited in what we have seen and that’s why we are only continuing to invest more there. And again, it starts with, how do we find product market fit and then how do we actually scale up our investments appropriately given what we are seeing. And what we see is, increased selection that we are offering customers, better quality of experience, more -- greater and greater affordability levels, especially with our investments through programs like DashPass and better service levels. As a result, we are seeing higher order frequencies, higher retention, increase engagement with some of our new categories as well in these countries. And so, that’s really what we are seeing from customers, and frankly, their voice, as well as their -- how they choose to spend their dollars is really what informs us and guides us. And so we are only seeing progress there. And I think those inputs are what has translated into certain outputs such as our revenue growth, order growth, category share growth, all of these things. So I think once we have nailed these inputs, that’s why you are seeing the growth of the investments behind them and that’s why we are also really excited about the Wolt partnership, because we will get to do this on a bigger scale across over 20 countries. And Prabir, do you want to add…

Ross, just to add…

…on that topic?

Yeah. Yeah. And just to finish up that point, I mean, there’s obviously been category driver that Tony alluded to. But in addition, I mean, we stay super disciplined when it comes to these investments. That’s what’s allowed us to grow the U.S. business and we are applying the same rigor to whether it’s new categories or international, and we are seeing margin improvement. And so that then allows us to invest more with greater confidence. So let me just conclude that point. And on your question on sales and marketing, the reason why sales and marketing declined was because our Driver acquisition or Dasher acquisition cost were lower quarter-on-quarter. As we have said in earlier quarters, we fixed the undersupply situation that we faced earlier in Q2 and we find ourselves well supplied, and we expect to be well supplied in 2022. And the big reason for that is because the people that generally become Dashers are a very different audience than the types of people that the other gig economy competes companies are competing for it. So specifically, I think, we had said over 90% of Dashers had really they have no plans to drive for rideshare and only 4% say they prefer to drive share compared to food delivery. And so the reasons for that is, because you don’t need a car to Dash. You can Dash on a scooter, you can Dash on a bike. It tends to be safer because we are not sharing your personal space with another human being. So as a result of that, it’s a very different audience that we can go after, and we -- because we find ourselves was supplied to those Dashers acquisition cost and resulting as the marketing counts decline quarter-on-quarter.

Your next question comes from the line of Deepak Mathivanan with Wolfe Research. Your line is open.

Hey, guys. Thanks for taking the questions. Two questions from us. So, first, Tony, in 2021, you guys launched a lot of new offerings and expanded across many verticals. The pace of innovation was pretty strong. But as we think about 2022 and maybe even 2023, what are one or two main initiatives you feel is ready to graduate and kind of become more meaningful on financial KPIs in the next like 12 months to 24 months? And then second question, maybe for Prabir, it seems like MAU was up 20% last year and frequency was also up pretty nicely. But as we think about your guidance, 19% GOV growth at the high end for full year, how should we think about the assumptions for MAU growth frequency and AOE for this year? Thank you.

Yeah. Hey, Deepak. On the first question, I appreciate the comments on product innovation. We are always trying to accelerate that, especially when we hear signals from how we can serve customers better, whether they be consumers, merchants or Dashers. So we are constantly trying to increase the pace when we see that opportunity and only until we find product market fit do we actually scale them into fairly large businesses, and I think we have had a track record of doing this now, whether it’s certainly our core U.S. restaurants business, then building products on our platform like DoorDash Drive, as well as Storefront. We are the leading category player in the convenience category, in the pickup category. We have taken businesses pretty much from scratch in these new categories of convenience, grocery and other categories from zero into now $1 billion plus scale businesses that 14% of our monthly active users spend time in and so I think there’s been a lot of progress to your point. In terms of just focusing on one or two things, what we tend to do is, our investment philosophy is really -- it starts with building the best product. And so long as we like what we are seeing from a product market fit perspective and we are constantly trying to make every detail right within each one of these categories, then do we stage gate further investment into growing these, whether it be into new geographies, into more merchants. We doubled the number of non-restaurant partners, for example, in our marketplace in 2021. But we have a lot of work to do. And so, the way I think about it is, so long as we stick to our investment philosophy of making sure that we build the best possible product as measured by our retention and order frequency, and we stay disciplined in how we can scale them, not just with capital, but frankly, with the right leaders place in these initiatives, as well as the right team allocated to those leaders, we will be in a great spot.

And Deepak, on your question around the 2022, and obviously, the longer term outlook. Look, it’s as simple as the goal is to increase the end use and to continue having the part of sequence. We don’t run the business on a one-year clock and we think about planting seeds for many, many years in the future. So the way to think about it is these categories, even the food categories to be underpenetrated. In that core business at a tight run rate, we are less than as Tony alluded to 5% of total net restaurant sales. And so even in core food, there’s significant room for continued adoption and engagement increases. Now you add to that all these other categories that we have made initial forays into, right, whether it’s convenience, grocery, alcohol, pet food, retail and so on. These are massive markets that are also in lower and lesser penetrated compared to the food category. So we put these two things together, it’s an exciting opportunity set ahead and basically signals that we are seeing in terms of early adoption and engagement as we transition from being food delivery app to basically all of your -- serving all of your local commerce needs. It gives us confidence that we will sustain a healthy growth rate for a long period of time.

Got it. Okay. Thanks, Prabir. Thanks, Tony.

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

Hi, guys. Thanks for taking my question. Two, please. One, can you just update on your progress on advertising and can that contribute to 2022? Or is it a longer-term initiative? And then secondly, on non-restaurant verticals, where are you seeing traction with consumers? Is it grocery? Is it alcohol? Can you be a little bit more specific there? Thank you so much.

Yes. Sure. I will take both of those and feel free to add Prabir. On the first question around advertising, we are seeing tremendous excitement, pretty much actually from all of the stakeholders, from advertisers, from retailers, from restaurants, from consumers. And to me, what’s really important is making sure that we can achieve two objectives, which sometimes can come at odds with one another. One is how do we offer the best return in -- advertiser return in terms of their return on spend. And the second is how do we make sure that we certainly not degrade, but ideally improve the consumer shopping experience. And these are the two things that we are constantly focused on. And so we are in no rush to monetize, although we are really excited by what we are seeing. But these are kind of our objective functions, if you will, when it comes to advertising. It’s doing really well. It’s off to a tremendous start. There is extraordinary demand. But I think staying disciplined, and again, building the best possible product to allow us to have these long-term sustained periods of growth is what -- is how we think about this. With respect to, I think, the new categories, we are actually seeing traction within each category. And I think in some regard, this is probably not a surprise. I mean just think about some of these categories, whether it’s things that you are stocking up in your pantry or grocery shopping or everything in between. I mean these are the highest frequency possible categories when it comes to consumer spend. And all we are really doing is, I think, adding to the incremental demand on one side by making sure that customers can get things delivered in minutes, not hours or days. And then on the other side, we are enabling these retailers and merchants to be able to do it through their own channels, their own apps, their own websites. And so I think for those reasons, that’s why we are seeing this growth. I mean, I think, as you saw in our shareholder letter, on an aggregate basis, about 14% of our monthly active shoppers have shopped in a category outside of restaurants. But that number is substantially higher than that in hundreds of markets already and so -- and this is pretty universal across categories.

And Andrew, just on your -- just to go back to the advertising question, we are expecting advertising revenues to grow in 2022, but we will invest those incremental profits and the growth initiatives with the aim of maximizing long-term profit dollars.

Great. Thank you.

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

Thanks so much. Maybe just dovetailing with some of what we have talked about so far. As you move into more categories and you think about more product evolution over the long-term, I think in the Shareholder Letter, there was a comment about retention and frequency in LTV. How should we be thinking about long-term margin structure or the long-term LTV-to-CAC in this business now versus maybe the pre-pandemic period when you IPOed a couple of years ago and how would you frame what you have learned over the last couple of years with respect to that? Thanks.

Yeah. Thanks for the question, Eric. Just to -- let me take that question. The first thing, I’d say is, what we shared in the letter was meant to be a framework for how we think about how we manage the business. So today, we are not managing the business to a certain margin. We are not trying to increase margins quarter-on-quarter. We are not trying to manage an absolute amount of EBITDA. Instead, what we do is we invest. And we invest in areas. We start small and we look for signals along two dimensions. The first is product market fit. So we alluded to the fact that 14% of our MAUs use verticals outside of food. That’s a signal of product market fit. We are looking forward to frequency signals. We are looking for the impact of initiatives and actions we take on retention on the core platform whether it’s a relative to the core platform. If we see product market signals, that’s one criteria that’s been met. The second is are we making progress on unit economics. And we have a view for each business, what target unit economics need to be in order to meet our return thresholds. And so we are looking for steady progress. When you have seen both of these things, like we have with our new verticals, like we have with our international business and with our platform business, that’s when we start scaling up our investments. And so that’s the framework we generally use versus trying to target a certain margin. The reason we included that example in the shareholder letter was to provide a case study of how we think about it, because if you were trying to grow margins period-on-period, a product like DashPass would never come to be,…

The only thing I’d add to what Prabir said is really, I think, the latter part of the question around what have we learned kind of during the pre-COVID kind of post-COVID era of behavior. Is just the resilience of the category and how I think we have put to rest, I think this question of what happens to demand as diners go back and eat inside restaurants. Well, I think clearly, takeout and delivery, as shown by our performance, not just in the fourth quarter but also in 2021, just in an aggregate is that they are complementary. It’s very possible to eat inside of a restaurant and get delivery, because we eat three times or more maybe per day, and that’s over 100 shopping moments per month. And then you start adding in these other categories, and you just ask yourself the question, well, is it complementary to go inside shopping malls or other types of stores and maybe get it delivered online or over the Internet. And I think that’s kind of what we have seen certainly in the restaurant delivery business and we are starting to see that in all of our other categories.

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

Great. Thanks for taking the question. I have seen some examples on the app when I ordered dinner, for example, might push me to order ice cream from another local store. I imagine new categories like grocery and alcohol and convenience, so probably incrementally less time sensitive. So there’s probably even a greater opportunity for Dashers to go to multiple stores for the same customer, but is that a substantial opportunity, either from a cost efficiency perspective or higher GOV or maybe some potential advertising opportunity?

Hey. It’s Tony. Yeah. I will take your question. I think it’s a really good point and I think this kind of really is very exciting for us, because it’s the thesis we have had since really day one of the company, which is this business anything last mile and local commerce is really about building greatest order density. That’s why we started with restaurants, right? It has the highest count of stores across every category of local retail restaurants who that is and it has the highest frequency of use, which is what gives you the possibility for the highest order density. And if you can start with the highest order density, then you have a lot of optionality. Optionality to do some of the things that you describe a bring other types of things and I think hopefully being useful to consumers and different kinds of merchants, which therefore provides more flexible work opportunities for Dashers. It also provides opportunities to do I think some of the things you described around, which is efficiency. But to us, it’s just again, it goes back to, how do we become more and more useful in people’s lives, right? How do we solve more jobs for a consumer as we think about every shopping occasion they have. And again, while we have impressive order frequency, it’s a small fraction of actually how much shopping that actually takes place, right? So we have a lot of work to do, I think, to solve even more jobs. And I think the same is true for merchants and not only in helping them build their channels, but doing other types of jobs for them. That’s why we have our platform services business. And I think together, if we can do these two things, we will provide the greatest number of work opportunities for Dashers as well. And so you are absolutely right, and I think a lot of the assumptions behind the question. But to us, it just starts with how do we build the best possible experience in solving the most number of jobs.

Great. Thanks, Tony.

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

Hey, guys. Thanks for taking my question. I was just wondering if you could dig a little bit more into the chart about DashPass order mix versus contribution profit per active consumer. I thought it was pretty surprising and interesting to see that there’s such a wide variance of DashPass order mix and also the contribution dollars. So I was wondering what causes some cohorts to lag and then is it kind of just a function of time to get those lagging cohorts up to that close to $25 mark of contribution profit per active consumer? Thanks.

Hey. Thanks for the question, Mike. And it’s a good opportunity to explain exactly what the chart is because we got a few questions ahead of the call. So each dot on the chart is a quarterly cohort. So each -- this quarterly cohort starting from 2019 all the way through to the third quarter of 2021. And along the X-axis is the percentage of the orders from that cohort that are DashPass orders. On the Y-axis is the Q -- is the -- in quarter the Q4 2021 contribution profit per active user in that quarter for each of these cohorts. And as you can see, this positive correlation where the higher the DashPass order mix, the higher the contribution profit for MAU. And it goes back to the answer I gave to Eric to his question, which is with DashPass, we are making a trade-off to accept lower unit margins in exchange for significantly higher order frequency. And so as the order frequency increases, you generate more orders and those orders translate into greater cumulative contribution profit for each user. Now to your question around what drive the variance, its largely time. On the left side of this chart are basically newer cohorts, the right side of the shop are the older cohorts. And so generally, as time goes by, people -- consumers get increasingly habituated. They started using the product and DashPass making financial sense because once you start placing more than 2 to 2.5 orders, the product pays for itself. And so what you see is over time, as you -- as consumers save more money, they start using underpin DashPass, but then further drives up their order frequency.

Got it. That’s really helpful. And I guess one quick follow-up on order frequency. I was just wondering and on the 14% of customers that are now trying non-restaurant ordering for the first time or, excuse me, just using it. Do you expect that restaurant and non-restaurant can exhibit similar order frequency trends long-term or do you think that eating and ordering from restaurants is fundamentally a higher order frequency you kind of market?

In general, people’s activity on our app resembles how they operate in their daily lives, right? So if you think about this question came up sort of a few quarters ago and we went public around the mix between national brand restaurants versus local restaurants and frankly, it replicates what you see in the industry. Similarly, with areas such as convenience and grocery and alcohol and pet food, essentially, over time, as people’s awareness of DoorDash builds and as our selection builds and the levers that they live in, their behavior offline and online will converge. Today, it’s lower because that level, we are still making progress in terms of the selection quality, affordability paradigm, in order to hit the sweet spots that more and more consumers start becoming aware of DoorDash as an on-demand way to actually get access to these verticals that are adjacent to food delivery and the ones that they use. So short answer to your question is, over time, I expect the order frequency to basically limit how people shop in their daily lives.

Got it. That’s great. Thanks so much.

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

Thanks. I have a couple, if I can. First, just thanks for sharing the updated cohort data. If we just focus on maybe the narrower subset of users added during the pandemic, do you see consistent frequency and retention on those newer cohorts compared to older cohorts and in particular, in markets that have reopened more than others? And anything you can kind of share on how you think that’s going to play out over the rest of this year in terms of the cohort behavior and what’s embedded in the guidance? And then, secondly, on grocery, at the time of the IPO, I think, there were still some question marks around the unit economics and scalability of grocery. As you guys have progressed and learned in that category, how do you feel today about your ability to generate attractive unit economics and kind of how is that informing how you go-to-market on the grocery side? Thanks.

Great. So the first thing, let me just say is that the retention pre-COVID versus COVID, right? We were in the middle of COVID in 2020, retention spiked. It was at all-time highs, right? And then from there on, in 2021, you start to see a slow normalization to retention, especially as vaccination rates increased and in-store dining resumed. We are at a point now where -- and by the way, in 2021, early on in 2021, we were bolstered by the effect of stimulus payments that had an upward impact on both retention and order frequency. Where we are at today is still better than pre-pandemic levels. But the retention has now normalized where it’s slightly above pedantic levels, but not substantially. Order frequency is substantially higher compared to pre-pandemic levels, as well as 2020 levels, but that’s because of continued improvements to order frequency, both within the DashPass cohorts, as well as the non-DashPass cohorts.

Yeah. Look, on the second question around grocery. I mean, here’s like the way we think about it, right? I mean when you look at our portfolio of priorities, we have the U.S. core business of restaurant delivery. We have these new categories, one of which you are referencing grocery, platform services, international and advertising. The way we think about them is really, how are we doing against their life stage, right? Obviously, a lot of these businesses performed actually quite recently, a product like grocery, for example, is only about 12 months to 14 months old. We love the trajectory of the business, both top and bottomline, but it’s still in its earliest innings. And so right now, the focus continues to be making sure that we keep improving the product experience, the selection of partners that we can bring on and the inventory from these partners, the quality of the experience itself, the affordability of these deliveries, as well as the service levels. And so that’s really the focus right now on grocery, and again, like the way we think about making these investments is in a fairly disciplined way of making sure that we find product market fit before we actually scale these things out. And so when we do scale these things out, they tend to already have very, very robust unit economics and cohort performance.

All right. Thank you.

Your next question comes from the line of James Lee with Mizuho. Your line is open.

Great. Thanks for taking my question. My question is on DashMart. Maybe can you guys talk about the expansion plan maybe for FY 2022 and what are the key learnings so far? And just curious, what do you need to see for this business to scale will you consider M&A or partnership to expand this segment? Thanks.

Hey, James. It’s Tony. So, on DashMart, we really like what we see. Again, like this is another one of these newer initiatives about year and a half old. And what we are learning, I think, are benefits really for -- starting with a couple of audiences and I will talk about how it translates into the third audience. So, first, for consumers, a lot of these DashMarts are just bring selection of inventory into geographies where, frankly, didn’t previously exist, whether literally never existed or the hours of operation has now opened pretty wide to 24x7 now, which is a big improvement for what consumers are seeking. I think with respect to merchants, this is a critical infrastructure for a lot of them either to expand into new geographies or to increase into different hours of operations and so what we see is really DashMarts on a fairly long investment time horizon. Again, staying disciplined around finding product market fit before we choose to scale these things out, but what we are seeing is quite a lot of demand for them. And I think it really speaks to, again, what we are trying to create at DoorDash, which is really the largest local commerce app or marketplace where we are bringing incremental demand and the largest local commerce platform, where we are building tools and infrastructure, obviously, starting delivery with products like Drive. But if you think about all the other products and services that merchants need to build in order to compete digitally in today’s economy, well, it certainly expands far beyond just logistics. And so DashMarts are really a form of infrastructure to store inventory to possibly enter new geographies and certainly expand their hours of service. And so we plan on investing in this line of work for a really long time for those reasons, and obviously, if we can build both a marketplace and a platform with DashMart, I think it provides tremendous work opportunities for Dashers. But again, the investment philosophy stays the same, given how young dash marks are. It’s making sure that we have great product market fit and then we will continue to scale them.

And one quick follow-up question, Tony here. When you look at the non-restaurant business, in general, like two parts to this question, when you look at user behavior, do they tend to be more recurring in nature, are they more impulsive? And also second, for your non-restaurant business in general, can you be profitable over time without advertising?

So on the non-restaurant category what we are seeing is, pretty much quite a lot of different kinds of use cases. Are there people who just shop for impulse purchases for whatever the occasion might be, yes? But predominantly, we are seeing people come back for, I think, a lot of use cases. I mean, where the recurring behavior is looking for that middle of the week run now being solved by somebody else, right? That’s really the job that we are solving for a lot of these customers, right? Like when you think about the items near pantry that get consumed the earliest or the items in your refrigerator that maybe perish the earliest, those are the things that actually -- those are the types of things where you have to go back everything in a week, no matter how much you buy on a weekly basis, right, and those are the jobs where people have to do every single week and so we are seeing certainly both, although more of the behavior is recurring. And then I will let Prabir take, I think, your second question, which is really around, I think, the business model.

And James, we have not disclosed anything about the business model around non-restaurant verticals and so no comment on that question.

Okay. Thank you.

Your next question comes from the line of Mark Mahaney with Evercore ISI. Your line is open.

Okay. Thanks. Two questions. When you think about the number of DashPass members now, you have over 10 million out of, whatever, 25 million MAUs, what do you think are the obstacles to getting that penetration higher, I know it’s high, 40%. But I would think given the value prop and the frequency of the activity that, that could get into 60%, 70%, maybe long-term. So what’s -- what are the biggest things you have to solve for in order to get that penetration higher? And then any quick updated comments on Prop 22 and I know there was a the AG reversed or challenged the judge’s decision earlier this month. Any updated thoughts on how that’s going to play out or when we will know? Thank you.

Yeah. Prabir, do you want to take the first…

Yeah. I think…

… and I can take the second.

I want to take the first one and you take the second one. Okay. So, Mark, on your question on the 10 million out of 40 million, yes, the 10 million was a milestone. We are happy with its 40% of our MAUs. But there’s a lot of runway here, right? I mean, as you think about -- with 25 million MAUs, we are a small fraction of the U.S. population. Now add in the other countries we operate in, whether it’s Canada, Australia, Japan, Germany, and we have access to over 500 million people. And so in the context of that 500 million people, I mean even if you adjust for that for adults and so on, the 10 million membership size is a small fraction. So the path to get there is going to be back to the basics of selection, quality and affordability. So in selection, as we keep adding these new categories and new stores into these neighborhoods that cross-sell percentage, the 14% will start creeping up and order frequency in these new verticals will increase. Remember the point I made earlier about purchase behavior on our platform, ultimately mimicking or reflecting how human beings operate in their daily lives. So, over time, as that ate frequency increases, the savings opportunity increases and DashPass starts making sense. So even if it’s someone that doesn’t order enough restaurant delivery today, over time, DashPass may end up making sense for them, because they use DashPass to order their convenience goods, or their grocery goods or their liquid purchases or their pet food or retail and so on so forth. So there’s opportunity in that front and there’s opportunity for continuing improving quality. Today would mean consistent improvement, but reasonable number of deliveries are effective. So we have got a bunch of work to do to make the product reliable 100% of the time so that if you are a DashPass member, the experience truly feels special.

Yeah. And Mark, with respect to your second question on Prop 22, nothing has changed. I mean, we are absolutely right on the law here. In fact, I think even the California Attorney General have supported us in this regard that, 58% to 59% of the state population and voting population are saying that they pass something into law that should be legalized. I think it’s just common sense that that’s the right legal answer. But I think even more importantly than this, just more broadly speaking, we feel the same way about this issue anywhere in the sense that drivers in this type of economy ought to be able to take wherever they want to work, whenever they want to work and that flexibility is critical. I mean that’s what Prop 22 stands for a while giving them the protections that they deserve and we -- whether it’s in the State of California or frankly, any geography globally, that’s where we stand for, which is to support the Dasher. And the voters of California believe in this, the drivers believe in this and the California Attorney General believes in this.

Okay. Thank you, Tony. Thank you, Prabir.

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

Thanks. Just a couple. I guess, first, between the different categories, all the different categories you have going here in the U.S. and then, obviously, Wolt coming on here later this year, hopefully, and then Canada and Australia. Does all of that expansion, I guess, right in front of you, probably, keep you from, say, exploring other international expansion or should we assume other markets are sort of always under exploration? And then second, you think about the regulatory work likely to occur, if not in the future, if not already in your -- a lot of these international markets, talk about kind of how prepared you feel you are in terms of personnel and the associated expense necessary to kind of support those works, and hopefully, constructive dialogues? Thanks.

Yeah. Hey. It’s Tony. I will take both of those questions. With respect to the first, I think, you are certainly right in saying that we have quite a lot on our plate and we are constantly, again, trying to invent the best possible products. And again, when you think about the portfolio of initiatives of U.S. restaurants, new categories or platform services, international markets and advertising, there’s a lot of work to go around. So we always believe that we have to earn the right to serve customers in a second way by doing an excellent job in the first way and so that’s really what we are focused on. But look, I mean, it doesn’t mean that we are not scanning for opportunities. We are always looking for opportunities regardless, especially when we have such a robust core business that’s producing positive cash flow and with a very healthy balance sheet, it gives us lots of opportunities to be opportunistic and go on the offensive. I think with respect to your second question around regulatory preparation. Yes, I mean, this has been -- something that’s been a part of DoorDash really since 2013 when the company was founded. And this is -- these beliefs that we have had since day one of making sure that worker’s should be able to have this new standard where they get the flexibility that they are telling us over and over again with their words, as well as with their feet. And also the protections that we believe they deserve. And frankly, just like expire outdated laws that deserve to be expired. And we think the productive way in doing this is that governments and businesses such as ourselves should work together across any geography to make sure that this actually happens from the perspective of the worker, not from any other perspective. And so that’s what we are working really hard on and we have best-in-class teams to get that work done.

Yeah. Thank you.

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

Thanks, guys. A couple of questions. On the marketplace side of things, non-restaurant partners doubled 2021. Clearly, you have a lot of runway there and you have a focus on product market fit for scaling. But how do you think about ways to grow partners on a platform? And then any dynamics to call out with respect to the different commission points you launched earlier in 2021, 15%, 25%, 30%, as cohorts of partners experience or use that model or are they moving up to the different commission points.

Yeah. I will take the first question and maybe Prabir can take the second on the kind of different tiers of commission points. With respect to the first of adding more selection in these new categories, a lot of it is just doing the work quite candidly. I think what has been really attractive to all of these customers is, well, I mean, look at what we are bringing, we are bringing the largest on-demand audience for local commerce that has the highest frequency of shopping. That’s an incremental use case both from their physical activities, their own digital activities and other -- any other previous digital partnerships that they have signed. And so, as a result of that, actually, we are seeing quite a lot of excitement where people are starting to think of DoorDash, not just as lunch and dinner, but really everything inside the neighborhood. So we are actually seeing quite a lot of progress. And but that doesn’t mean that there isn’t work to be done. I mean we have to build a lot of products now that make sense for categories outside of restaurants, right? Everything from the catalog, to the in-store shopping process, to how we think about customer support, to think about how do we support people not just again on our channel, but also their own channel. So there’s a lot of work to be done. But I would say that the excitement from partners has been tremendous. I think some of those names you have seen in the press and things like this and we expect adding a lot more partners to come.

Brian, on the question about the pricing payers. Just as a reminder, this was aimed at SMB restaurants, not larger restaurants and on those that are coming through our self-service channel. So a small fraction of those have actually opted into the pricing tiers versus the prior pricing. And off the number that after the majority have picked the two higher tiers, which was in line with what we expected and kind of makes sense given the value that we drive at the higher pricing does.

Got it. Thanks guys.

Next question comes from the line of Jim Sanderson with Northcoast Research. Your line is open.

Thanks for the question. Just wanted to follow-up a little bit more on DashPass, I am wondering if you could help us to understand how the new DashPass members were recruited if this is primarily through credit card marketing programs, and then going forward, as you try to expand these types of programs internationally if your client acquisition strategy for DashPass is going to have to adjust away from credit cards. Just a little bit more texture on how that growth has developed.

Yeah. The vast majority of the DashPass members are through our own channels and the minority are through credit card channels.

And then, are the percentage or share of DashPass members that pay full membership, is that changing over time?

No. It’s relatively consistent. But, again, it depends on -- you will remember that one of the ways we on DashPass is through a free trial period. So depending on the intensity of our marketing efforts that free -- the trial versus paid mix changes, which is very consistent.

All right. Thank you.

There are no further questions. This does conclude today’s conference call and thank you for your participation. You may now disconnect.