DOORDASH surged as much as 10 per cent after posting the largest total customer orders ever and raising its outlook for the year, underscoring the strength of its food, grocery and retail delivery business.

The company saw a customer record with 543 million orders in the third quarter, surpassing analyst expectations of 511 million, with the gross value of those orders rising 24 per cent from the year prior to US$16.8 billion, it said on Wednesday (Nov 1). The company expects fourth-quarter gross order value to be US$17 billion to US$17.4 billion, implying an upward revision of its 2023 outlook provided in the last release based on Bloomberg calculations.

San Francisco-based DoorDash has benefited from the sustained appetite for take-out meals by maintaining a 65 per cent share of monthly food-delivery sales in the US per Bloomberg Second Measure, overshadowing rivals Uber Technologies and Just Eat Takeaway.com’s Grubhub.

It’s also made further inroads in non-restaurant delivery in the past quarter: it expanded partnerships with more grocery retailers and non-food merchants, broadened its collaboration with ALDI to offer highly-regulated alcohol delivery, syphoning off rivals’ share in these categories such as last-minute or small-basket grocery purchases.

The grocery delivery business has doubled in gross order value in the third quarter compared to a year ago, chief financial officer Ravi Inukonda said.

Unlike its grocery rival Instacart, which trades as Maplebear, DoorDash did not break out financials for its advertising business, Inukonda said. Instacart’s prospectus filing for its September trading debut showed a reliance on ads to drive profitability.

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“The mistake companies make is they build an ads business and the underlying marketplace business is not growing,” Inukonda said, “which means eventually the ads business will not grow”.

“When we think about it, our goal is: How do you make sure the ads that we show are really relevant, really personal to consumers and how they actually drive consumer engagement on the platform,” he said, adding that a second goal is how ads can drive more sales to merchants.

During the third quarter, the delivery firm has also managed to narrow net loss on a GAAP basis and deliver record adjusted earnings by driving down driver acquisition costs, Inukonda said, citing better retention and engagement after the company redesigned its app for couriers, among other operational efficiencies. BLOOMBERG