[1/8]Given all the uncertainty swirling around it, I put together a detailed analysis of $DASH's unit economics. As it turns out, a relatively simple model captures most of the customer dynamics (great fits!).
Key insights:
bit.ly/3lqUAfk
Key insights:
bit.ly/3lqUAfk
[2/8]
1/ Exeptional repeat buying -- e.g., customers do ~2.6 orders in yr 1, 3.5 in yr 2, even more thereafter. Very back end loaded.
2/ Variable margin is thin but expands over calendar time and tenure: < 0% in yr 1 to 10% in yr 3 => valuation sensitive to margin assumptions.
1/ Exeptional repeat buying -- e.g., customers do ~2.6 orders in yr 1, 3.5 in yr 2, even more thereafter. Very back end loaded.
2/ Variable margin is thin but expands over calendar time and tenure: < 0% in yr 1 to 10% in yr 3 => valuation sensitive to margin assumptions.
[3/8]
3/ Even w/ short horizon CLV estimates, unit economics look exceptionally strong. I infer that $DASH gets a return on CAC of 250% and ~900% over 3 and 5 yrs, respectively. Very good, significantly de-risks their unit economics despite back end loaded monetization.
3/ Even w/ short horizon CLV estimates, unit economics look exceptionally strong. I infer that $DASH gets a return on CAC of 250% and ~900% over 3 and 5 yrs, respectively. Very good, significantly de-risks their unit economics despite back end loaded monetization.
[4/8]
4/ COVID has been a huge shot in the arm, but as with other companies (bit.ly/33z5326), bigger boost for acquisition than retention. I infer ~200% increase in business from new customers relative to baseline due to COVID, vs 70% increase from existing customers.
4/ COVID has been a huge shot in the arm, but as with other companies (bit.ly/33z5326), bigger boost for acquisition than retention. I infer ~200% increase in business from new customers relative to baseline due to COVID, vs 70% increase from existing customers.
[5/8]
5/ If their customer acquisition data can be trusted, $DASH is spending about $6 to acquire customers, making back $21-60 after acquisition over a 3-5 year horizon...
5/ If their customer acquisition data can be trusted, $DASH is spending about $6 to acquire customers, making back $21-60 after acquisition over a 3-5 year horizon...
[6/8]
6/ ...but I think there may be some sort of data error in a key chart in the filing which could change these inferences. As a result of this, everything (CAC and CLV) could be 4x larger.
6/ ...but I think there may be some sort of data error in a key chart in the filing which could change these inferences. As a result of this, everything (CAC and CLV) could be 4x larger.
[7/8]
7/ If their customer acquisition data is to be trusted, might bode less well for overall valuation -- already acquired more of their TAM, which would create headwinds for acquisition, and/or drop goodness of customers due to possible abuse of new customer promo discounts.
7/ If their customer acquisition data is to be trusted, might bode less well for overall valuation -- already acquired more of their TAM, which would create headwinds for acquisition, and/or drop goodness of customers due to possible abuse of new customer promo discounts.
[8/8]
8/ A more detailed analysis that is significantly more comprehensive and applies to the entire restaurant meal delivery category will be coming soon.
8/ A more detailed analysis that is significantly more comprehensive and applies to the entire restaurant meal delivery category will be coming soon.
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