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DoorDash, Inc. (NYSE:DASH)
Q1 2021 Earnings Call
May 13, 2021, 5:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Operator

Good day, and thank you for standing by. Welcome to the DoorDash Q1 2021 earnings call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Mr.

Andy Hargreaves. Please go ahead.

Andy Hargreaves -- Vice President of Finance and Investor Relations

Thanks, May. Hello, everyone, and thanks for joining us for our first-quarter 2021 earnings call. I'm pleased to be joined today by co-founder, chair and CEO, Tony Xu ; and CFO, Prabir Adarkar. We would like to remind everyone that we'll be making forward-looking statements during this call, including statements regarding our expectations of our business, future financial results and guidance and strategy.

Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those described in our forward-looking statements, and some risks -- such risks are described in our risk factors, including in our SEC filings, including Form 10-K. You should not 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 such non-GAAP results to the most directly comparable GAAP financial measures, may be found in our investor letter, which is available on our Investor Relations website. These non-GAAP measures should be considered in addition to our GAAP net 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.

We're going to go straight into questions today. So May, please take the first question.

Questions & Answers:


Operator

Our first question is from the line of Lloyd Walmsley from Deutsche Bank. Your line is now open.

Lloyd Walmsley -- Deutsche Bank -- Analyst

Thanks for taking the question. Two, if I can. Just, first, in the shareholder letter, you called out increased frequency from existing customers who order convenience. And I'm curious if you can just put a finer point on that.

Is that increases in frequency even on the food delivery side, just more habituation to the app? Or is it more just a comment that convenience is additive and not cannibalistic? And I guess maybe in areas where the product is more full in terms of other things that you offer on the platform on top of food, convenience, other stuff, are there similar dynamics where just the more categories people use it across, the more they use within individual categories? And then the second question would just be on the new commission packages. How are you seeing kind of merchants react to the new packages? Are they opting into the higher-value bundles? And what should we kind of expect in terms of the take rate impact from that? Anything you can share there would be great. Thanks.

Prabir Adarkar -- Chief Financial Officer

Hey, Lloyd. It's Prabir. Why don't I take the first question on the frequency comment, and then Tony will take the second? It's the latter thing you mentioned, which is what we actually find is that these categories are symbiotic with one another. So customers who order from new categories subsequently increase their frequency with restaurants by a greater amount than those who do not order from new categories.

So said differently, once you begin to use multiple categories, that actually increases your engagement with the core restaurant category. And then the other thing we found is that customers who actually engage with us across different categories beyond food also appear to have stronger retention and engagement versus restaurants who place their -- or versus consumers who place their orders with restaurants only. So we're actually seeing strength because the addition of categories basically makes a user stickier with our platform.

Tony Xu -- Co-Founder, Chairman, and Chief Executive Officer

Yes. Hey, Lloyd, and -- this is Tony. On the second question, the business impact is reflected in our guidance, and it's something that we feel pretty comfortable. And as we tested this program, as we do with all of our new initiatives with merchants, for about six months, so it's meeting our expectations in terms of our rollout so far.

But I thought I would take a second to give you a bit of the guiding principles or the design principles behind why we shift to what we announced a couple of weeks ago. If you take a step back, we took quite a lot of actions during the pandemic to make sure that these businesses would be successful. That's the entirety of why DoorDash was founded, to make sure that these local businesses would succeed. And so during the pandemic, I'm very proud that the actions we took as well as hundreds of millions of dollars of investments we made allowed these businesses to have eight times the odds of surviving the pandemic versus the average restaurant in the industry.

Now as we get out of the pandemic and as we start heading into reopening, which I'm very excited about, given where the country is in terms of vaccination rates increasing and such, is that we wanted to give these business owners, and speaking with them for about six, seven months about this, the best chance at getting out of the gate as fast as possible. And what we heard over and again was they really want a choice, choice on the spectrum of investing in growth and in which case, they can pick some of the higher-priced plans that allows them participation in programs like DashPass, where DoorDash is covering the cost of delivery; or choice in the form of greater profitability, depending on how they're seeing staffing and things like that as they get into recovery; choice in the form of whether the orders are coming from the DoorDash app or their own channel, where we're offering a commission-free, no-cost product called DoorDash Storefront, which will allow them to build their own digital channels; as well as choice in the form of nondelivery use cases like pickup, where we slash rates from 15% to 6%. And so that really was the reason why we shift to what we announced, and we had been working with these merchants for about six months on it. And in terms of the financial impact or the impact on the business, all of that is reflected in our guidance.

Prabir Adarkar -- Chief Financial Officer

And just to add one point to that, if you actually look at these programs, there is an offset between the lower commission rate that comes with the higher consumer fee. It's not a perfect offset, but just keep that in mind as you think about the ramification slide.

Lloyd Walmsley -- Deutsche Bank -- Analyst

OK. Thanks, guys. Nice quarter.

Operator

Next in line is Douglas Anmuth from J.P. Morgan. Your line is open.

Douglas Anmuth -- J.P. Morgan -- Analyst

Thanks for taking the questions. I have two. First, just I hope you could talk more about your thoughts on the impact of reopening and perhaps just how your thoughts have changed relative to three to six months ago, if they have. And then second question, just on Dashers supply, I guess, just how do you get comfortable with how that can play out here in the coming months, given some of the supply issues, of course, that are seen with ridesharing and in some other areas? Thanks.

Prabir Adarkar -- Chief Financial Officer

Hey, Doug. Thanks for the question. So the first thing I would say, we were encouraged by the trends that we saw in the first quarter, particularly as markets reopened and in-store dining grew. The negative impact to consumer behavior was smaller than we had initially anticipated, and that enabled us to actually beat our Q1 guidance by 9%.

What's driving that is the commentary we made even at the -- in our earlier earnings call. We talked about consumer behavior being sticky. So as consumers begin to use the product, new habits develop, and those habits tend to persist. And part of that is being bolstered by the fact that the product has gotten routinely better over the course of time.

Just over the course of this past year, the selection on the platforms improved in terms of the number of restaurants as well as new categories, such as convenience stores and grocery stores. Quality has improved, our affordability has gone better, and all these things continue to act in support of continued stickiness as far as consumers go. And so as we look to the future, we're optimistic about the balance of the year, which led to an increase of guidance by about 15% to $35 billion to $38 billion of GOV. On your second question, I know rideshare is focused on this, but it's important to remember that rideshare drivers are a different pool of people than our Dashers.

Over 75% of our Dashers are students or have other part-time or full-time jobs. On average, they dash less than four hours per week. Dashers don't require a car. They can dash on bikes.

Our population of Dashers tend to skew more female, and that's likely because you don't have to share your personal space with another individual. And so even in our survey data, shows that 21% of our Dashers that have driven for rideshare, and only 6% say they prefer rideshare. So it's a completely different pool of people. We had a little bit of a supply blip in March.

We solved the issue. We acted quickly. We took a bunch of actions, including improving the efficiency of the logistics network, expanding our marketing funnels, improving our conversion rates for Dashers. And as a result, we're now acquiring more Dashers per week than we were compared to Q1.

So we're well supplied today, and we expect that to be the case for the foreseeable future.

Douglas Anmuth -- J.P. Morgan -- Analyst

Thank you, Prabir.

Operator

Next is Youssef Squali from Truist Securities. Your line is now open.

Youssef Squali -- Truist Securities -- Analyst

Great. Thank you very much, and congrats on the impressive quarter. Just two, if I may. First, can you just speak to the recent trends that you've seen so far in May? I think your guide speaks to it, but anything to highlight in terms of just the competitive intensity and how you guys feel about the -- particularly the growth in the nonfood delivery business in the quarter and contribution to it? And second, as you look at the diversification that you're embarking on into nonfood, convenience, grocery, etc., I was wondering if you can just speak to the broader -- well, first, how big do you think that business could become over time? Is this a situation where you could see a scenario where half of your business is coming from these new initiatives, say, over the next, I don't know, three to five years? But probably also, just how do you see that impacting the take rate over time? Thank you.

Tony Xu -- Co-Founder, Chairman, and Chief Executive Officer

Sure. Hey, it's Tony. I'll start. So far, the quarter is off to a great start.

And what I'll say is that the impact of reopening really has been more muted than we expected, certainly, when we were looking at this last fall and even as we're starting to prepare for this toward even last summer. With respect to some of the new categories, we're very excited about our progress. I mean growing 40% quarter on quarter, our nonrestaurant orders now are totaling over 7% of our total orders, and again, this happened in a pretty short period of time. We really, in earnest, launched our second category outside of restaurants in convenience, which where we're now the market leader in just under a year.

So things are certainly ahead of plan and exceeding our expectations there. With respect to, I think, the broader question of how this plays out and unfolds, as -- to remind all of us on the call, as I mentioned during our -- actually, our very first earnings call, we're really investing in four areas. We're investing certainly to grow our core business, and we're seeing a greater strength there, especially as we saw record engagement in the quarter, as well as our investment into other use cases, such as pickup, where we're also the market leader now, or the office business like DoorDash for work. We are investing certainly into new categories.

We're also investing into the buildout of our platform. So DoorDash is as much a marketplace or app like grocery orders, as well as a platform, that gives you products like DoorDash Drive or DoorDash Storefront to help merchants build their own channels and then finally, international market growth. And so those are the four buckets of where we're investing, and we're very, very excited by both how things are progressing in all of these areas as well as what that might mean for diversification in the future.

Prabir Adarkar -- Chief Financial Officer

And Youssef, if I could just add to that. I mean some of the markets we mentioned, whether it's convenience or grocery, these are extremely large markets: convenience is $200 billion, $250 billion; grocery is an $800 billion to a $1 trillion market. But the thing that's unique is both of these have very low penetration rates. And if you think about our platform and the success that was enjoyed in convenience up to this point, despite launching that business 12 months ago, it's because of the extensibility of our platform.

It's because we take a hybrid approach that pairs together not just third-party partners in our marketplace, like CVS, like Walgreens, like 7-Eleven, in fact, Rite Aid, that we recently announced, but also we're bringing our own first-party selection to consumers. And that's in order to provide consumers a choice and serve them in underserved neighborhoods. And so penetration is extremely low today and there's a lot of runway for growth.

Operator

Next question is from the line of Ross Sandler from Barclays. Your line is now open.

Ross Sandler -- Barclays -- Analyst

Hey, guys. Just a quick follow-up on that last one and then one other one. So the 7% of orders for nonrestaurant, can you just talk about the unit economics of that business and your go to market? Like Instacart, I think, is mostly getting its profit pull from ads. Gopuff is a 1P business.

So how do we think about the blended offering that you guys have and EBITDA per order? I think you mentioned the AOV is a little bit lower for convenience. So any color there would be helpful on EBITDA per order. And then it sounds like, based on the letter, that you guys are expecting a little bit of a drop-off into the summer, which I think everybody can totally understand as things reopen. The question is, is more like as you look at the data, are you seeing new customers that came in, in 2020? Are those the ones that are going to drop off? Or is it that the higher frequency DashPass folks who order like five times a month are just going to order less when we get to the summer? Any color on that would be helpful.

Thanks, guys.

Prabir Adarkar -- Chief Financial Officer

Hey, Ross. So on the first question, in terms of unit economics, we're not actually breaking out unit economics for these orders. What I will say is we're fortunate in that our core U.S. business is cash generative, and we're taking that cash and we're investing it to grow some of these new verticals, whether it's convenience or grocery or expand into new merchant services, like Storefront, as well as expand internationally.

So we're fortunate to have a profitable core business that allows us to invest in these areas. On the question regarding the summer seasonality, it was exactly right, it was baked into the guidance, is the fact that starting about April and going all the way through to Labor Day, usually as the weather improves, you see consumers go dine in. And that behavior is generally consistent across both new customers that were recently acquired as well as existing customers that have been on the platform for a while, which is behavior that we tend to see as weather improves and people want to go out a little bit more. So you don't see it in our historical numbers, partly because of the rapid pace of customer acquisition.

But if you look at it on a cohort level, it's there, both for you new and existing cohorts.

Operator

Next is Ralph Schackart from William Blair. Your line is now open.

Ralph Schackart -- William Blair -- Analyst

Good afternoon and thanks for taking the question. Just curious if you could provide maybe a little bit more color on Dasher pay and incentive trends that you've seen both in the quarter, maybe kind of quarter-to-date. And in the letter, you talked about a 40% pay increase, 13%, I think, decrease for cost to consumers over a two-year period. And it sounds like you're in a better supply situation now, which is great.

But just curious if you could give some more color on kind of recent trends on the incentives. Are some of those getting passed on to the consumer? And then, eventually, as government incentive programs subside, do you think the driver incentives will normalize over time? Thank you.

Prabir Adarkar -- Chief Financial Officer

Hey, Ralph. Maybe I'll take that question. I mean the summary is we're expecting take rates to improve sequentially from Q1 to Q2. And in part, that's driven by the fact that Dasher pay will normalize because the supply state is actually better today.

That problem has been resolved, and we've brought markets back to health. Taking a step back, just in terms of overall Dasher pay, we've said before, in the context of our overall strategy, our North Star is to reduce customer prices, consumer prices, reduce the fees and commissions we charge to merchants and increase earnings for Dashers. And so the 40% year-over-year increase in Dasher earnings per active hour is consistent with our general philosophy. So as we continue to squeeze out more efficiency in -- out of the logistics network, as we continue to improve our defect rates and that results in unit economic improvements, we invest a lot of that back into the ecosystem by taking down fees and by increasing Dasher earnings.

Ralph Schackart -- William Blair -- Analyst

Great. And if I could squeeze in one more, and just on the pickup opportunity you talked about on the call and the letter, it seems like a pretty good opportunity for you in a post-COVID environment. Maybe just talk about sort of how that's been received by consumers, kind of what you've learned. And as you add sort of technology to that, long-term, some innovation, what are your views on this opportunity? Thank you.

Tony Xu -- Co-Founder, Chairman, and Chief Executive Officer

Sure. I'll take that. It's Tony. I think the greatest privilege we probably have in this business is that people eat 20 to 25 times a week, maybe more, maybe less, during this pandemic.

But what I will say is that when someone is doing that kind of frequency of consumption, it's never going to happen in one method. It's never going to be all in cooking. It's never going to be all in eating out or eating in or getting deliveries. I think, especially as we get out of the pandemic, we're going to go back into doing some of the things that I think are now priced commodities, like grabbing a coffee on the way to work or doing a walk along the block with your colleagues and grabbing a snack or what have you.

And so we're seeing quite a lot of excitement to the pickup product, I think not just because people are tired of being stuck at home, but I think people are -- I think that there's just the mere fact that because we consume so often, that this is one of the natural use cases that governs our behavior. And so we're very excited to continue investing there.

Ralph Schackart -- William Blair -- Analyst

Great, Tony, and thanks, Prabir.

Operator

Next is Deepak Mathivanan from Wolfe Research. Your line is now open.

Deepak Mathivanan -- Wolfe Research -- Analyst

Great. Thanks for taking the question, guys. One for Tony and one follow-up for Prabir. Can you talk about your partnership strategy for the new categories? I mean, you entered into partnerships with a lot of retailers directly.

But as you kind of think about expanding it further over the next few years, how should we think about your desire to work with platforms that have off-line business integrations like the online presence systems, point-of-sale software companies, Shopify and even companies like Facebook, to scale the merchant side rapidly on both marketplace and drive?

Tony Xu -- Co-Founder, Chairman, and Chief Executive Officer

Yes, I'll start. Hey, Deepak, it's Tony. So the way that we look at all things is how do we build the best product. And for our marketplace, what that really means is how do we offer the best selection, quality, price and customer service.

And for our platform business, where we're building tools for merchants to allow them to grow their own digital businesses, it's really about how do we allow them to be very successful across all the activities that they have to perform in order to build a digital business. And so with that, I suppose, as the guiding principle, we would consider any partnerships that achieve those means, and they can look different depending on whether or not they fit into our marketplace or whether or not they fit into our platform. And so at DoorDash, we really are thinking about building the system that has both components. One system is our app, which is trying to grow all of local commerce and bring everything inside your neighborhood to you in minutes, not hours or days.

And then on the other side, we are trying to empower you, the merchant, to replicate and grow on top of your four-wall business and compete in today's digital economy. So any partnerships that fit each respective part of our business and then the two jobs that we do, which is to grow and to empower local commerce, we're all ears.

Deepak Mathivanan -- Wolfe Research -- Analyst

Got it. No. That's very helpful, Tony. And then, Prabir, can you talk about the second half guidance on GOV? Should we expect the GOV to sort of bottom out in 3Q and then start improving sequentially in 4Q into 2022? How are you thinking about like the slope in the second half? Thank you so much.

Prabir Adarkar -- Chief Financial Officer

Yes, yes. The second-half GOV is impacted really by two factors. The first, we're baking in some uncertainty with respect to consumer behavior as markets continue to reopen and there's increased vaccination rates. But second, to your point, there's some seasonality there, and that usually continues until Labor Day, and so you've got -- like sort of Q2 and Q3 in there, there were usually a lull.

And then as the winter season starts selling in, you start to see growth from there on out. So it's basically what you pointed out. The one thing I will say, Deepak, is just stepping back, the GOV guidance for the year is materially higher than what we thought at the beginning of the year. So I would -- I point to the shape of the curve you see in the model, right? But at the end of the day, let's not lose sight of the big picture, which is we're clearly more optimistic today than we were earlier on.

Deepak Mathivanan -- Wolfe Research -- Analyst

Got it. That's very helpful. Thanks, guys.

Operator

Next is Michael McGovern from Bank of America. Your line is now open.

Michael McGovern -- Bank of America Merrill Lynch -- Analyst

Great. Thanks for taking my question, and congrats on the great quarter. I just wanted to ask maybe about -- maybe just like a regulatory overview. It seems like there's been a lot of news items on the regulatory side recently.

So maybe first, if you could comment about the federal side and the comments from the Department of Labor secretary recently. And just any views on what could happen long term on the federal side. And then I think some of your peers in the gig economy or rideshare space has talked about potentially working out deals with states that might look similar to Prop 22. So can you share with us if you're like participating in those kind of discussions or just what you think about the potential for regulatory developments on the state side as well.

Thank you.

Tony Xu -- Co-Founder, Chairman, and Chief Executive Officer

Yes. Hey, Mike, it's Tony. I'll take that. So we're very excited about what we heard Secretary Walsh and the Biden administration say, which, to our ears, was that they're very excited and figuring out with us, with the private sector companies, how to actually construct a model that takes us into the 21st century instead of, I guess, moving backwards toward the 20th century.

I mean, if you think about it, what DoorDash stands for is optimizing for the worker. So in this case, the Dasher, the millions of drivers on our platform. And the No. 1 thing we hear over and again from Dashers is that they want this flexibility that has never existed in any labor environment before.

And the question is how do we marry that in the face of traditional labor definitions with benefits and protections that we believe they deserve. And what we heard from really anyone we speak to is a willingness to engage in that conversation and construct forward a third way in which we can pair this independence and flexibility with benefits. And what -- and that's true at the federal level, that's true at the state level and any elected official that we speak with.

Prabir Adarkar -- Chief Financial Officer

And Mike, just to be clear, the DOL has made clear that they aren't taking immediate action and instead want to engage with us. And we're in dialogue with the federal government, as well as the state level.

Michael McGovern -- Bank of America Merrill Lynch -- Analyst

Got it. And maybe just as one quick follow-up to that. I thought the prior comments about the difference between Dashers and rideshare drivers were really important, especially on the regulatory front. So could you talk about just like the possibility that rideshare drivers and food delivery couriers are regulated separately with different rules? Or do you think that gig economy workers could just all be kind of lumped together long term in terms of like that regulatory response and development?

Prabir Adarkar -- Chief Financial Officer

Yes. I'm not sure that we've got a firm conclusion on this matter. I mean, as Tony indicated, Secretary Walsh's comments actually suggest an openness to engage with the private sector to figure this stuff out. So it's a little early to signal whether rideshare drivers will be grouped together with the broader gig economy or kept separate.

We'll come back if there's any update on this topic as our conversations progress.

Michael McGovern -- Bank of America Merrill Lynch -- Analyst

Got it. Thanks so much.

Operator

Next is Jason Helfstein from Oppenheimer and Co. Your line is open.

Sean Rausch -- Oppenheimer & Co. Inc -- Analyst

Thanks. This is Sean on the call for Jason. So just one on how are you guys thinking about the risk around local pricing caps? And how is this taken into account with the new merchant pricing model? And then second, can you talk about the competitive environment around nonfood sales relative to the environment of food delivery? Is it more competitive, about the same, less competitive? What are you guys seeing there? Thank you.

Tony Xu -- Co-Founder, Chairman, and Chief Executive Officer

Yes. Hey, Sean, it's Tony. I'll start. So on the first question around commission caps, what we expect is that these commission caps will be rolling off pretty soon.

In fact, we've already seen some of this in some very large cities, whether it's Chicago, Kansas City, Cincinnati. I saw some even roll off earlier this week. And so we're very encouraged, I think, by what we're seeing, which is elected officials allowing capitalism to do its job and allow everyone to really make things work for all audiences. And we're the first to be excited at DoorDash to have lots of folks go back inside restaurants.

And I think people will. And I think that as that continues to happen, as the reopenings occur, more and more folks will see delivery as an augmented way to help grow the physical businesses and to be one part of the portfolio of how they do business moving forward. I think with respect to the second question, which is around -- I think you asked about the competitive environment in some of these newer categories, I mean, look, I would say that, certainly, things have exceeded our expectations. If you look at the fact that we started just a year ago, in our first nonrestaurant category of convenience, and in about a year's time, we've become the market leader in that category, I think really just showed the strength of both -- actually across all audiences, the receptivity to our platform, how Dashers were willing to do deliveries across different hours of the day, different categories, how consumers are willing to see us help solve different jobs at different times of the week and how different types of merchants would like to have access to the largest on-demand food audience that comes to us at the highest frequencies every month.

And so, so far, we're seeing quite a lot of progress in these areas. But to Prabir's earlier points to an earlier question, we're at the beginning of a massive transformation that's just unfolding. I mean, just to remind all of us, even in the core restaurant business, even if you added all of the sales up for the largest platforms in the U.S., we're about 10% or less of the entire restaurant industry. If you did the same math for some of these other categories that we're entering, be it convenience, grocery and others, that number is very, very, very small single digits.

And so there's a massive runway ahead.

Operator

Next question is from the line of Ron Josey from JMP Securities. Your line is open.

Ron Josey -- JMP Securities -- Analyst

Great. Thanks for taking the question and really great quarter. I wanted to ask two, please, more on -- one on DashPass, and you talked about subscribers more than doubled year over year. Average order frequency is an all-time high.

And I think you even mentioned that new users joining in 1Q was somewhat of a record. But can you talk about the strategic nature of DashPass here? Just specifically, as you think about increasing the penetration of new categories, and they're increasing the MAUs for new categories, just how you see both DashPass and new categories are working together. And then, Tony, maybe as a follow-up to your prior answer, and this is a weird question maybe, but could it be that with the reopening, the amount of change in consumer behavior that the reopening might actually help longer-term about how we, as consumers, just order things, restaurants, food, etc., online and how you're thinking about how the reopening might actually be a tailwind? Thank you.

Prabir Adarkar -- Chief Financial Officer

Ron, it's Prabir here. Let me take the first one, and Tony will take the second. Look, DashPass, at the end of the day, is a core pillar of our strategy. If you think about what we're trying to do for consumers, is to deliver the widest selection, the best quality and superior affordability.

And DashPass strikes right through the heart of both selection, as well as price, because with DashPass, as you know, consumers pay 0 delivery fees and reduce service fees on their orders. And so what we're finding is consumers, particularly this time, are increasing their engagement, will derive value out of the fact that the $10-subscription fee defeats the cost of multiple delivery fees or multiple orders. And so we're seeing the value proposition of DashPass translate into sign-ups that have then allowed us to grow the DashPass membership base to be two times what it was a year ago. And another aspect of the strategy is to continue adding verticals into DashPass.

So much the same way Prime allows you -- Amazon Prime allows you to consume products across multiple categories, that's our vision for DashPass. It started with food, and over time, we've added convenience stores in there. And over time, as we continue to add categories, you see those get slotted into DashPass to improve the consumer value proposition.

Tony Xu -- Co-Founder, Chairman, and Chief Executive Officer

Yes. And with respect to the second question around the reopening as a possible tailwind, I guess, no one has the crystal ball in terms of how this shape of recovery occurs and to, I think, some of the earlier discussion, how the slope of change happens. But what I would say is that the long-term trend is that when it comes to convenience, things always move toward the direction of greater convenience, which means that over the long term, and I suppose if you looked at it from that perspective, the tailwind thesis would be that the -- all that's happening is that we've kind of shifted some of the growth that was otherwise going to happen by, who knows, some period of time. And I think what it has allowed is just that it's allowed more and more people to be more and more comfortable with this type of business, which allows possibly faster entry into other categories as we power all of local commerce, for example.

And so I think that's kind of where we're seeing it, but I do just want to remind people that convenience only moves in the direction of fairer convenience. I mean, if someone was -- wanted to go and eat inside of a restaurant, for example, they're probably not thinking about delivery. Conversely, if they're thinking about takeout or delivery, they probably are never going to go inside the restaurant in the first instance. And so I think it's -- again, I always like to step back in moments where we're trying to figure out what seems like a very difficult question, to take a slightly longer time horizon and think, well, the greatest privilege we have here is that people eat 20 to 25 times a week, and do we see some share of that growing into more convenience, we believe the answer is yes.

Ron Josey -- JMP Securities -- Analyst

That's helpful. Thank you, guys.

Operator

We have our next question from Spencer Tan from Evercore ISI.

Spencer Tan -- Evercore ISI -- Analyst

Hi. Thanks for taking my question. Just I had one question around guidance. So it looks like if you were to take the midpoint of your GOV and EBITDA guidance, that you're guiding to EBITDA accretion versus prior quarters.

Just wondering if that's a direct review from the commission structure change that you announced this quarter? And how we should think about that, maybe just providing a little bit more color around that specifically. And then secondarily, I guess, looking into the recovery, are you seeing any restaurants consolidate the platforms that they utilize? And do you think that DoorDash has a competitive advantage from that standpoint by offering other types of software as a service and storefront versus maybe some of the smaller competitors out there, i.e., having the ability to maybe gain a little bit more share from some of your comps? Thank you.

Prabir Adarkar -- Chief Financial Officer

Sure. So if I understand the question correctly, it had to do with the EBITDA margins and the fact that our GOV is picking up slightly. Is that right?

Spencer Tan -- Evercore ISI -- Analyst

Yes.

Prabir Adarkar -- Chief Financial Officer

Got you. Yes. Look, what I would say is we provided a range of EBITDA, but if you -- just to reiterate the way we manage our business, it's to try to maximize scale. And so to the extent that there are opportunities available to invest and in order to beat top line, we will do that all day long.

The reason for expanding the guidance compared to the prior quarter is simply we don't want to feel compelled to have to spend the money in the quarter if we don't find the right return thresholds. And so what this allows us to do is to drop that profitability to the bottom line in the event that there aren't right investment opportunities. And the slight margin accretion that you see is because of the sequential increase in take rates that we're expecting in Q2 because the supply state is normalized.

Tony Xu -- Co-Founder, Chairman, and Chief Executive Officer

And with -- this is Tony. With respect to the second question, yes, we do believe that by having a wider portfolio of products, we can certainly serve more use cases, both from a consumer perspective. As I was mentioning earlier, people eat 20 to 25 times a week. And so by having more use cases, whether it be in delivery, pickup, the office business, we're serving a bigger addressable market and I suppose, share of stomach in that regard.

And then with respect to the merchant, on the platform piece, where we're not only their largest source of incremental demand through our app, but the fact that we also power their own channels, power their deliveries, that gives us greater order density, which drives lower fulfillment costs, but it also allows us to take up greater kitchen capacity as we're powering the majority of the space that is being used up to produce the food in the first instance. And so I think those are some ways in which our suite of products are generating a competitive advantage, both for the consumer, in terms of just giving a lot more value beyond delivery, as well as some of the things that Prabir said earlier, where we're adding more categories at no extra charge into a program like DashPass. And then on the merchant side, the wide portfolio of products are choosing either to grow through the largest source of incremental demand or app or the fact that we're powering all of their channels, allows us to certainly work with merchants more but also take up more of their production capacity.

Spencer Tan -- Evercore ISI -- Analyst

Got it. Thank you so much, and congrats on the quarter.

Operator

Next question is from the line of Clark Lampen from BTIG. Your line is now open.

Clark Lampen -- BTIG -- Analyst

Hi. Good evening. Tony or Prabir, in light of some speculation on M&A that's come up somewhat recently, I wanted to see if we could revisit how you guys are thinking about both new market entry and also specifically weighing up sort of build versus buy options for doing that. Thank you.

Prabir Adarkar -- Chief Financial Officer

Yes. Look, I mean, we've said previously that one of our aspirations is to build a global company. And today, we operate in the U.S., Canada and Australia. And over time, over a long horizon, we will try to expand outside of these regions.

Now as far as M&A goes, what I would say is we look at all of the opportunities around us, and we're fortunate in that we've got a core business in the U.S. that generates cash and we can invest organically to build out our presence internationally. To the extent M&A makes sense, it might be something we consider, but the bar is extremely high just given that M&A, frankly, is a complicated matter and getting it right is difficult. So unless we've got absolute conviction that M&A is the right tool, we will usually rely on organic mechanisms.

Operator

No further questions at this time. I turn the call back over to Mr. Andy Hargreaves.

Andy Hargreaves -- Vice President of Finance and Investor Relations

Perfect. Thank you for the questions, and thank you, everybody, for joining us today. Have a great afternoon or evening, and we'll talk to you again in a few months. Bye.

Operator

[Operator signoff]

Duration: 41 minutes

Call participants:

Andy Hargreaves -- Vice President of Finance and Investor Relations

Lloyd Walmsley -- Deutsche Bank -- Analyst

Prabir Adarkar -- Chief Financial Officer

Tony Xu -- Co-Founder, Chairman, and Chief Executive Officer

Douglas Anmuth -- J.P. Morgan -- Analyst

Youssef Squali -- Truist Securities -- Analyst

Ross Sandler -- Barclays -- Analyst

Ralph Schackart -- William Blair -- Analyst

Deepak Mathivanan -- Wolfe Research -- Analyst

Michael McGovern -- Bank of America Merrill Lynch -- Analyst

Sean Rausch -- Oppenheimer & Co. Inc -- Analyst

Ron Josey -- JMP Securities -- Analyst

Spencer Tan -- Evercore ISI -- Analyst

Clark Lampen -- BTIG -- Analyst

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