US-based food delivery giant DoorDash is preparing for an Initial Public Offering (IPO) as consumers move to app-based solutions for their day-to-day requirements.
In its prospectus submitted along with the papers filed for the IPO, the firm stated that “Technology has changed consumer behavior and driven a wave of demand for convenience. Recent events have further accelerated these trends, pulling the future of e-commerce forward for businesses large and small.”
DoorDash’s financials show significant growth in revenue achieved over the last several months. In the first nine months of the year, the San Francisco-based company clocked $1.9 billion in revenue, more than double what it did in the entire 2019 ($291 million).
The firm expects to use the capital infusion to substantially develop its platform, including “expanding our platform offerings, developing or acquiring new platform features and services, expanding into new markets and geographies, and increasing our sales and marketing efforts.”
DoorDash and its fellow competitors will also benefit from the recent ruling of considering drivers as contractors instead of employees (Proposition 22) which negates the need to allocate substantial resources towards mandated employee-related benefits, further increasing the cash burn of these operators.
DoorDash claims that it has captured 50 percent of the food delivery market in the U.S., followed by Uber Eats, Grubhub and Postmates.
The food delivery company did warn that the US market is “fragmented and intensely competitive,” and its competitors have made acquisitions or strategic agreements to work together.”
“In addition, certain of our competitors have recently acquired kitchens to enable them to produce and deliver food directly to consumers,” the company remarked in its filed documents.
Founded in 2013, DoorDash has more than 18 million customers and 1 million “dashers” (food delivery contractors) who deliver food in the U.S., Canada and Australia. It has more than 390,000 merchants in its network.