DoorDash buys Wolt to expand in Europe as Q3 sales rise
DoorDash is buying Finnish delivery service Wolt Enterprises, expanding its reach into Europe and other markets.
The $8.1 billion deal announced Tuesday will bring DoorDash into 22 countries where it doesn’t currently operate, including Germany, Sweden, Hungary and Israel.
The combined companies will reach 700 million people, DoorDash CEO Tony Xu said.
“We believe these markets provide an opportunity to grow our international business to multiples of what it is today,” Xu said in a conference call with investors. “This should allow us to invest and expand more efficiently than we could have done on our own and on a faster timeline.”
Japan is the only market in which both DoorDash and Wolt overlap.
San Francisco-based DoorDash Inc. was widely expected to join forces with a European ally in the highly competitive and rapidly consolidating delivery market. Amsterdam-based Just Eat Takeaway gobbled up Grubhub in a $7.3 billion deal announced last year.
Wolt has 4,000 employees, but DoorDash wouldn’t say how many drivers make deliveries for the company. The company’s gross order volumes hit an annual run rate of $2.5 billion at the end of the third quarter. By comparison, DoorDash said its gross order volumes rose 44% to $10.4 billion in the third quarter.
Wolt co-founder and CEO Miki Kuusi will run DoorDash International when the transaction closes, likely in the first half of 2022.
Kuusi said Wolt has already conquered the difficult market of Finland, where there is low customer awareness of delivery, high pay for drivers and low density in cities, which makes it harder to make a profit.
“Every other country was a lot easier to do,” Kuusi said.
DoorDash’s shares soared 19% in after-hours trading.
The news came as DoorDash reported higher-than-expected third-quarter sales.
The delivery company said revenue grew 45% to $1.26 billion in July-September from the same period a year ago. That beat Wall Street’s forecast of $1.17 billion, according to analysts polled by FactSet.
The company said it had a record 9 million DashPass subscribers at the end of the quarter, up from 5 million at the same time last year. DashPass members, who pay $9.99 per month for free deliveries on most orders, tend to order more frequently, the company said.
DoorDash said it also grew sales by adding non-restaurant partners like Bed Bath & Beyond and Total Wine in the third quarter. Xu said 12% of the company’s active users are now trying non-restaurant delivery, up from just 1% in the first quarter of this year.
Its net loss widened to $101 million for the quarter from $43 million a year ago, as it continued to spend heavily on expansion. The loss amounted to 30 cents per share. Wall Street had been forecasting a loss of 10 cents a share.