Ladies and gentlemen, thank you for standing by, and welcome to the DoorDash Q4 fiscal 2022 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a Q&A session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press star one. Thank you. Andy Hargreaves, Vice President of Investor Relations, you may begin your conference.
Thanks. Hello, everybody, and thanks for joining us for our Q4 2021 earnings call. I'm 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'll 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 Wolt transaction results. 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. With that, we can go straight to questions.
At this time, I would like to remind everyone, in order to ask a question, please press star followed by one on your telephone keypad. Your first question comes from the line of Doug Anmuth with JP Morgan. Your line is open.
Thanks for taking the question. I know you're 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.
Doug, thanks for the question. Yeah, that's right. We are focused on maximizing scale. The reason for that is because we operate in very large categories that are underpenetrated today. What I'll say is we're 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-over-quarter and a year-over-year basis. That increase in profit is what we're funding into these investments, and we're watching for core signals around retention and order frequency to make sure that they hit our return 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 for 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? Second, can you maybe speak to recent trends in the competitive landscape? Do you believe, as your main competitor has been talking about, that you guys may have lost some share in the U.S.? If so, maybe just 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.
Maybe I'll start with 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 you know early in Q2. In fact, with every sort of successive variant, the impact on our business has basically diminished. You know, the Q4 outperformance, I wouldn't attribute that to Omicron. Tony, if you want to comment on the competitive landscape now.
Yeah. Hey, Youssef. We actually haven't noticed any share loss in any time period, you know, recently in the Q4 or for the year of 2021. I think when you think about, you know, maybe why this is, it really just breaks out into, I think, you know, 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. Then when you think about, you know, the possibility of new customer acquisition, especially just given how deep some of these channels are, they're really deeper than any other possible channel in which you can acquire new customers into the industry.
I think the second part of, you know, how you can gain share certainly is just, you know, what is the retention and order frequency of these customers, and we continue to have leading, retention and order frequency in the category. You know, this has always been our focus, by the way, which is to make sure that we build the best product, which you can see is demonstrated through these leading, both new customer acquisition as well as, you know, retention metrics. 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, you know, continuing to be the fastest-growing, you know, part of the industry, we're only 5% of U.S. industry sales. I think when you look at all of our active users, while we had a record quarter of 25 million monthly active consumers, we're a, you know, single-digit percentage of the populations that we serve. Certainly, as you start adding into some of these new categories, as well as international geographies, and there's the platform side of what we do with products like Drive and Storefront. I mean, we're a tiny, tiny fraction of the opportunity in front of us, and that's why, you know, we're very excited in investing.
That said, you know, in terms of, you know, how we view, you know, the future, besides staying disciplined in terms of how we make investments, it first and foremost starts with making sure that we have the best product, which is gonna offer the best combination of selection, quality, affordability, and service. So long as we continue doing that, I think the scoreboard will continue taking care of itself.
Just to add to Tony's points, Youssef, to answer your question directly, over the last 12 months, we've gained two points of share, over two points of share according to third-party data sources. Specifically, with respect to Q4, we believe we've gained share as we grew 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. 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'll be able to run the same playbook successfully? I think there's some skepticism in the investment community that, you know, what you've seen in the U.S. is replicable in these international countries. Maybe just talk a little bit about that. Then, Prabir, your sales and marketing expense was actually down a bit quarter-over-quarter, in contrast to GOV being up nicely. 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're talking about kicking in or, you know, 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'll have Prabir take the second question on sales and marketing expenses. You know, with respect to our international progress, I mean, we're super excited in what we've seen, and that's why we're only continuing to invest more there. Again, it starts with how do we find product market fit, and then how do we actually scale up our investments, you know, appropriately given what we're seeing. What we see is, you know, increased, you know, selection that we're 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're seeing higher order frequencies, higher retention, increased you know, engagement you know, with some of our new categories as well in these countries. That's really what we're seeing from customers and frankly, you know, their voice as well as their how they you know, choose to spend their dollars is really what informs us and guides us. We're only seeing progress there. I think, you know, those inputs are what has translated into, you know, certain outputs such as, you know, our revenue growth, order growth, category share growth, all of these things. I think, you know, once we've nailed these inputs, that's why you're seeing, you know, the growth of the investments behind them.
That's why we're also really excited about the Wolt partnership because we'll get to do this on a bigger scale across over 20 countries. Prabir, you want to take the question on sales and marketing?
Just to finish up that point, I mean, there's obviously been category share growth that Tony alluded to. In addition, I mean, you know, we stay super disciplined when it comes to these investments. You know, that's what's allowed us to grow the U.S. business, and we're applying the same rigor to whether it's new categories or international, and we are seeing margin improvements. That then allows us to invest more with greater confidence. Let me just conclude that point. On your question on sales and marketing, the reason why sales and marketing declined was because our driver acquisition, our Dasher acquisition costs were lower quarter-over-quarter.
You know, as we'd said in earlier quarters, you know, we'd fixed the under supply situation that we faced earlier in Q2, and we find ourselves well supplied, and we expect to be well supplied in 2022. 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 competitors companies are competing for. Specifically, I think we had said over 90% of Dashers said that they have no plans to drive for rideshare, and only 4% say they prefer to drive rideshare compared to food delivery. You know, the reasons for that is because, you know, 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 you're not sharing your personal space with another human being. As a result of that, it's a very different audience that we can go after. Because we find ourselves well supplied, you know, those Dasher acquisition costs and the resulting sales and marketing costs 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. First, Tony, in 2021, you know, you guys launched a lot of new offerings and expanded across many verticals. The pace of innovation was pretty strong. As we think about 2022 and maybe even 2023, you know, 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, you know, 12-24 months? And then, second question maybe for Prabir. You know, seems like MAU was up 20% last year, and frequency was also up pretty nicely. You know, 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 AOV for this year? Thank you.
Yeah. Hey, Deepak. On the first question, you know, appreciate the comments on, you know, pace of product innovation. We're always trying to accelerate that, especially when we hear signals from how we can serve customers better, whether they be consumers, merchants or Dashers. We're constantly, you know, trying to increase the pace, you know, when we see that opportunity, and only until we find product market fit, you know, do we actually scale them into, you know, fairly large businesses. I think we've had a track record of doing this now, whether it's, you know, certainly our core U.S. restaurants business, then, you know, building products on our platform like DoorDash Drive as well as, you know, Storefront. We're the leading category player in the convenience category, in the pickup category.
We've taken, you know, businesses pretty much from scratch in these new categories of convenience, grocery, and other categories from zero into now, you know, billion-dollar-plus scale businesses that 14% of our monthly active users, you know, spend time in. I think there's been a lot of progress to your point. You know, in terms of you know, 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.
Long as, you know, we like, you know, what we're seeing from a product market fit perspective, and we're constantly trying to make every detail right within each one of these categories, then do we stage gate, you know, further investment into, you know, 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. We have a lot of work to do.
You know, the way I think about it is, you know, 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, you know, we can, you know, scale them, not just with capital, but frankly with the right leaders placed in these initiatives, as well as the right team allocated to those leaders, we'll be in a great spot.
Deepak, on your question around Proposition 22 and obviously the longer-term outlook. Look, at its simplest, the goal is to increase MAUs and to continue driving up order frequency. We don't run the business on a one-year clock, and we think about planting seeds for many years in the future. The way to think about it is these categories, even the food categories, are relatively underpenetrated. In that core business at our current run rate, we're less than, you know, it's only 1%-5% of total U.S. restaurant sales. Even in core food, there's significant room for continued adoption and engagement increases. Now you add to that these other categories that we've made initial forays into, right? Whether it's convenience, groceries, alcohol, pet food, retail and so on.
These are massive markets that are also, you know, lesser penetrated compared to the food category. When you put these two things together, you know, it's an exciting opportunity set ahead. Based on these signals that we're seeing in terms of early adoption and engagement as we transition from being, you know, a food delivery app to basically serving all of your local commerce needs, you know, it gives us confidence that we can 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 questions. 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? 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.
Yeah, sure. On, I'll take both of those, and feel free to add, Prabir. You know, on the first question around advertising, we're seeing tremendous excitement, pretty much actually from all of the stakeholders, from advertisers, from retailers, from restaurants, from you know, consumers. To me, what's really important is making sure that, you know, we can achieve two objectives, which sometimes can come at odds with one another. One is how we, you know, offer the best return on ad spend. The second is how do we make sure that we certainly not degrade but ideally improve the consumer shopping experience. These are the two things that we're constantly focused on, you know.
We're in no rush to monetize, although we're really excited by what we're seeing. These are kind of, you know, 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. I think staying disciplined on, again, building the best possible product to allow us to have these long-term sustained, you know, periods of growth is how we think about this. With respect to, I think, the new categories, we're actually seeing traction within each category. I think in some regards, this is probably not a surprise.
I mean, just think about some of these categories, whether it's, you know, things that you're stocking up in your pantry or grocery shopping or, you know, everything in between. I mean, these are the highest frequency possible categories when it comes to consumer spend. All we're 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. Then on the other side, we're enabling these retailers and merchants to be able to do it through their own channels, their own apps, their own websites. I think for those reasons, that's why we're seeing this growth.
I mean, I think as you saw in our shareholder letter, you know, on an aggregate basis, about 14% of our monthly active shoppers have shopped in a category outside of restaurants. That number is substantially higher than that in hundreds of markets already. This is pretty universal across categories.
Andrew, just to go back to the advertising question, we are expecting advertising revenues to grow in 2022, but we will invest those incremental profits into 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 talked about so far. You know, 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 and LTV. You know, how should we be thinking about the long-term margin structure or the long-term LTV to CAC in this business now versus maybe the pre-pandemic period when you IPO'd a couple years ago? How would you frame what you've learned over the last couple of years with respect to that? Thanks.
Yeah, thanks for the question, Eric.
Thanks for the question. 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. Today, we're not managing the business to a certain margin. We're not trying to increase margins quarter- and- quarter. We're not trying to manage to an absolute amount of EBITDA. Instead, what we do is we invest, and we invest in areas, and we start small, and we look for signals along two dimensions. The first is product market fit. We alluded to the fact that 14% of our MAUs use verticals outside of food. That's a signal of product market fit. We're looking for order frequency signals.
We're looking for the impact of initiatives and actions we take on retention on the core platform, whether it's additive to the core platform. If we see product market fit signals, that's one criteria that's been met. The second is, are we making progress on unit economics? We have a view for each business what target unit economics need to be in order to meet our return thresholds. We're looking for steady progress. When we see 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. 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 you know provide a case study of how we think about it, because if you were trying to grow margins period-over-period, a product like DashPass would never come to be. It just wouldn't, because on each order, DashPass has lower unit margins. As we said from the beginning, if you're optimizing for long-term profit dollars, and we have confidence in the increasing order frequency of the DashPass program, as a result, the total dollars we can generate per user on the platform are higher compared to the alternatives. You know, I'm not avoiding the question legitimately because we aren't running the business to certain target margins, but we're happy with the progress we're making on maximizing long-term profit dollars.
The one thing that gives me further confidence or sort of room for upside is the advertising opportunity, right? The advertising opportunity only grows as our users and our engagement grows. Today, compared to, you know, a year ago, with 20% more MAUs compared to several years ago, we're 3-4 times the size of our business. These individuals are engaging with us, not just in the restaurant vertical, but across all of these different other verticals and over multiple surfaces within the app, which then gives us a tremendous opportunity to not just, you know, create new business lines, but also generate advertising revenue with a healthy ROAS. I think of that as upside to the model.
It's not something that you know that you should bake in certainly in the near term, because we need to be very careful about how we you know not just enable an advertising ROAS, but do so in a way-
Only thing I'd add to what Prabir said is really, you know, I think the latter part of the question around, you know, what have we learned kind of, you know, during the pre-COVID kind of post-COVID era of behavior is just the resilience of the category and how I think we've put to rest, I think this question of, you know, what happens to demand as, you know, diners go back and eat inside restaurants. Well, I think clearly takeout and delivery, as shown by, you know, our performance not just in the Q4, but also in 2021, just in an aggregate, is that they're complementary.
You know, it's very possible to eat inside of a restaurant and get delivery because we eat 3 times, you know, or more maybe, per day, and that's over 100 shopping moments, per month. Then you start adding in these other categories, and you just ask yourself the question, well, is it complementary to go inside, you know, shopping malls or other types of stores, and maybe get it, you know, delivered online or over the internet? I think, you know, that's kind of what we've seen, certainly in the restaurant delivery business, and we're 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. Jake, question. I've seen some examples on the app when I ordered dinner, for example, it might push me to order ice cream from another local store. I imagine new categories like grocery and alcohol and convenience are probably incrementally less time sensitive, so there's probably even a greater opportunity for Dashers to go to multiple stores for the same customer. Is that a substantial opportunity either from a cost efficiency perspective or higher GOV or maybe even potential advertising opportunity?
Hey, it's Tony. Yeah, I'll take the question. I think it's a really good point, and I think this kind of, you know, really is very exciting for us because it's a thesis we've had since really day one at the company, which is, you know, this business, anything, you know, 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 do, that is, and it has the highest frequency of use, which is what gives you the possibility for the highest order density. 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 of bringing 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, you know, logistics efficiency. You know, to us, it's just again, it goes back to, you know, 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, you know, every shopping occasion they have? Again, you know, while we have impressive order frequency, it's a small fraction of actually how much shopping that actually takes place, right? We have a lot of work to do, I think, to solve even more jobs.
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. I think together, if we can do these two things, we'll provide the greatest number of work opportunities for Dashers as well. You're absolutely right in I think a lot of the assumptions you know 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. I was wondering, you know, 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, Michael. It's a good opportunity to explain exactly what the chart is because we got a few questions ahead of the call. Each dot on the chart is a quarterly cohort. Along the x-axis is the percentage of the orders from that cohort that are DashPass orders. On the y-axis is the in quarter, the Q4 2021 contribution profit per active user in that quarter for each of these cohorts. As you can see, there's this positive correlation where the higher the DashPass order mix, the higher the contribution profit per MAU.
You know, this goes back to the answer I gave to Eric to his question, which is, you know, with DashPass, we're making a trade-off to accept lower unit margins in exchange for significantly higher order frequency. 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 drives the variance, it's largely time. On the left side of this chart are basically newer cohorts, the right side of this chart are the older cohorts. Generally, as time goes by, people, you know, consumers get increasingly habituated, they start using the product and, you know, DashPass starts making financial sense because once you start placing more than two and a half orders, you know, the product pays for itself.
What you see is over time, as consumers save more money, they start using and adopting DashPass, that then further drives up their order frequency.
Got it. That's really helpful. 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, 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, you know, eating and ordering from restaurants is fundamentally a higher order frequency kind of market?
In general, people's activity on our app resembles how they operate in their daily lives, right? If you think about, you know, this question came up sort of, you know, a few quarters ago when we went public around, you know, the mix between national brand restaurants versus local restaurants. 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 in the neighborhoods that they live in, their behavior offline and online, you know, will converge.
Today it's lower because that level, you know, we're 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, you know, as a, as an on-demand way to actually get access to these verticals that are adjacent to food delivery and the ones that they use. Short answer to your question is, over time, I expect the order frequency to basically mimic 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, you know, 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, you know, frequency and retention on those newer cohorts compared to older cohorts, and in particular in markets that have re-opened more than others? Anything you can kinda share on how you think that's gonna play out over the rest of this year in terms of the cohort behavior and what's embedded in the guidance? 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.
You know, as you guys have progressed and learned in that category, you know, 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. The first thing, let me just say, is that the retention pre-COVID versus COVID, right, when we were in the middle of COVID in 2020, retention spiked. It was at all-time highs, right? 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're at a point now. By the way, in 2021, early on in 2021, we were bolstered by the effect of stimulus payments that had, you know, an upward impact on both retention and order frequency. Where we're at today is still better than pre-pandemic levels, but the retention has now normalized. We're slightly above pre-pandemic levels, but not substantially.
Order frequency is substantially higher compared to pre-pandemic levels as well as, you know, 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, Lloyd, 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're referencing, grocery, platform services, international, and advertising. You know, the way we think about them is really how are we doing against their life stage, right? Obviously, a lot of these businesses, you know, were formed actually quite recently. You know, a product like grocery, for example, is only about 12-14 months old. We love the trajectory of the business, both top and bottom line, but it's still in its earliest innings.
Right now, the focus continues to be making sure that we keep improving, you know, the product experience, the selection of partners that we can bring on, and the inventory, you know, from these partners, the quality of the experience itself, the affordability of these deliveries, as well as the service levels. That's really the focus right now on grocery. 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. When we do scale these things out, they tend to already have 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. I'll take my questions. My question's on DashMart. Maybe can you guys talk about the expansion plan maybe for FY 2022, and what are the key learnings so far? Just curious, what do you need to see for this business to scale? Would you consider M&A or partnership to expand this segment? Thanks.
Yeah. Hey, James, it's Tony. On DashMart, we really like what we see. Again, like, this is another one of these, you know, newer initiatives, you know, about a year and a half old. You know, what we're learning, I think are benefits really for, you know, starting with a couple of audiences, and I'll talk about how it translates into a third audience. First for consumers, a lot of these DashMarts are just bringing selection of inventory into geographies where, frankly, it didn't previously exist. You know, whether literally it never existed or, you know, the hours of operation is now, you know, opened pretty wide to 24/7 now, which is a big improvement for what consumers are seeking.
I think, you know, with respect to merchants, this is critical infrastructure for a lot of them, either to expand into new geographies or to, you know, increase into different hours of operations. So what we see is really DashMart's on a fairly long, you know, investment time horizon. Again, staying disciplined around finding product market fit before we choose to scale these things out. What we're seeing is, you know, quite a lot of demand for them. I think it really speaks to, you know, again, you know, what we're trying to create at DoorDash, which is really the largest local commerce, you know, app or marketplace where we're bringing incremental demand, and the largest local commerce platform where we're building tools and infrastructure, you know, obviously starting with delivery with products like DoorDash Drive.
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. DashMarts are really a form of infrastructure, you know, to store inventory, to possibly enter new geographies and certainly, you know, expand their hours of service. We plan on investing in this category, in this line of work for a really long time, you know, for those reasons. Obviously, if we can build both, you know, a marketplace and a platform with DashMarts, I think it'll provide tremendous work opportunities for Dashers. Again, the investment philosophy stays the same.
Given how, you know, young DashMarts are, it's making sure that we have great product market fit, and then we'll continue to scale them.
One quick follow-up question, Tony, here. When you look at the non-restaurant business in general, right, two parts to this question. When you look at user behavior, do they tend to be more recurring in nature? Are they more impulsive? Also second, for your non-restaurant business in general, can you be profitable over time without advertising?
On the non-restaurant category, what we're seeing is pretty much quite a lot of, you know, different kinds of use cases. Are there people who just shop for impulse purchases for, you know, whatever the occasion might be? Yes. But predominantly we're seeing people come back for, I think, a lot of use cases. I mean, where, you know, 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're solving for a lot of these customers, right?
Like when you think about the items in your pantry that get consumed the earliest, or the, you know, 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 every single week no matter how much you buy on a weekly basis, right? Those are the jobs where people have to do every single week. And so we are seeing certainly both with, although more of the behavior is recurring. And then I'll let Prabir take, I think, your second question, which is really around, I think, the business model.
Yeah. James, we have not disclosed anything about the business model around non-restaurant verticals. 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 it at 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 you know, I would think given the value prop and the frequency of the activity, that could get into 60%-70% maybe long term. So what are the biggest things you have to solve for in order to get that penetration higher? And then any quick updated comments on Proposition 22? And I know there was the AG reversed or challenged the judge's decision that earlier this month. Any updated thoughts on how that's gonna play out or when we'll know? Thank you.
Yeah. Prabir, you wanna take the first and I can take the second one?
Yeah. Why don't I take the first one, and you take the second one? Okay. Mark, on your question on the 10 million out of 40, yes, the 10 million was a milestone we're happy with. It's 40% of our MAUs. There's a lot of runway here, right? If you think about potential, with 25 million MAUs, we're a small fraction of the U.S. population. Now, add in, you know, the other countries we operate in, whether it's Canada, Australia, Japan, Germany, I mean, we have access to over 500 million people, right? In the context of that 500 million people, and even if you know, if you adjust for that, for adults and so on, the 10 million membership size is a small fraction.
The path to get there is going to be back to the basics of selection, quality and affordability. 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, you know, purchase behavior on our platform ultimately mimicking or reflecting how human beings operate, you know, in their daily lives. Over time, as that order frequency increases, the savings opportunity increases and DashPass starts making sense.
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 the convenience goods or their grocery goods or their liquor purchases or their pet food or retail and so on, so forth. There's opportunity on that front, and then there's opportunity to continue improving quality. Today, we've made consistent improvements, but still, you know, a reasonable number of deliveries are defective, and so we've got a bunch of work to do to make the product reliable 100% of the time, so that if you're a DashPass member, the experience truly feels special.
Yeah. Mark, with respect to your second question on Proposition 22, you know, nothing has changed. I mean, we still think we're absolutely right on the law here. In fact, I think even the California Attorney General has supported us in this regard that, you know, when 58%-59% of the state population and voting population are saying that, you know, they passed something into law, that should be legalized, I think it's, you know, just common sense that that's the right legal answer.
I think, you know, even more importantly than this, you know, just more broadly speaking, you know, we feel the same way about this issue, you know, anywhere in the sense that drivers, you know, in this type of economy ought to be able to pick wherever they want to work, whenever they want to work, and that flexibility is critical. I mean, that's what Proposition 22, you know, stands for, while giving them the protections that they deserve. We, you know, whether it's in the state of California or frankly any geography globally, that's what we stand for, which is, you know, to support the Dasher. You know, the voters of California believe in this, the drivers believe in this, you know, 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, you know, 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, you know, 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? Then second, when you think about the regulatory work likely to occur, if not in the future, if not already in your, you know, a lot of these international markets, talk about just 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'll take both of those questions. You know, with respect to the first, I think you're certainly right in saying that, you know, we have quite a lot on our plate, and you know, we're constantly again trying to invent the best possible products. When you think about, you know, 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. You know, we always believe that we have to, you know, earn the right to serve customers in a second way by doing an excellent job in the first way, and so that's really, you know, what we're focused on. Look, I mean, it doesn't mean that we're not scanning for opportunities.
We're always looking for opportunities, you know, regardless, and especially when, you know, we have such a robust core business that's producing positive cash flow and, you know, with a very healthy, you know, 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, I think this has been, you know, something that's been a part of DoorDash really since 2013 when the company was founded.
This is these beliefs that we've had since day one of making sure that workers should, you know, be able to have this new standard, where they get the flexibility that they're telling us, you know, over and over again with, you know, their words as well as with their feet, and also the protections that we believe they deserve, and frankly, just, like, expire, you know, outdated laws that, you know, deserve to be expired. 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. That's what we're working really hard on, and we have best-in-class teams to get that work done.
Got it. Thank you.
Your next question comes from the line of Brian Fitzgerald with Wells Fargo. Your line is open.
Thanks, guys. A couple questions. On the marketplace side of things, non-restaurant partners doubled in 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 the platform? Any dynamics to call out with respect to the different commission points you launched, you know, earlier in 2021, 15, 25, 30%, as cohorts of partners experience or use that model? Are they moving up to the different commission points?
Yeah. I'll take the first question, and maybe Prabir can take the second on the kind of different tiers of commission points. You know, 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're bringing. We're bringing the largest on-demand audience for local commerce that has the highest frequency of shopping. That's an incremental use case, you know, both from their physical activities, their own digital activities, and other any other previous, you know, digital partnerships that they've signed.
As a result of that, actually, you know, we're 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. We're actually seeing quite a lot of progress and, you know, but that doesn't mean that there isn't work to be done. I mean, we have to build a lot of, you know, products now that make sense for categories outside of restaurants, right? It's everything from the catalog to the, you know, in-store, you know, shopping process to how we think about customer support to think about, you know, how do we support, you know, people not just, again, on our channel, but also their own channel.
There's a lot of work to be done, but I would say that the excitement from partners has been tremendous. I think, you know, some of those names you've seen in the press and things like this and, you know, we expect adding a lot more partners to come.
Brian, on the question about the pricing tiers, just as a reminder, this was aimed at SMB restaurants, not larger restaurants, and particularly those that are coming through our self-serve channel. A small fraction of those have actually opted into the pricing tiers versus the prior pricing. Of the number that opted in, the majority have picked the two higher tiers, which was in line with what we expected and, you know, kind of makes sense given the value that we drive at the higher pricing tiers.
Got it. Thanks, guys.
Your 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 and 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.
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 have to remember that one of the ways we get people activated on DashPass is through a free trial period. Depending on the intensity of our marketing efforts, the free or the trial versus paid mix changes, but it's relatively 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.