Despite tripling its revenue in the fourth quarter, and boasting three consecutive quarters of positive EBITDA, San Francisco-based food delivery app DoorDash remains unprofitable. 

In its first-ever earnings report last week, the company said it lost $36 million in revenue due to caps on restaurant commissions during the pandemic.

Its quarterly loss came to $312 million, nearly $200 million more than the same period last year. Much of that net loss stemmed from one-time charges related to the company's December 2020 IPO, CFO Prabir Adarkar said.

As indoor dining restrictions mounted, many states, in an effort to support restaurants, ordered temporary commission caps on the rates they had to pay third-party delivery apps. In some cities, fees were not to exceed 15% per order, half of delivery apps' typical charges to restaurants. 

As a result, DoorDash is operating under price controls in 73 jurisdictions, it said in its report, up from 32 in the last quarter. Revenue generated from commission fees cover the cost of being listed on the delivery company's marketplace as well as delivery costs.

DoorDash told shareholders it expects "price controls to almost double" in the current quarter from the last quarter.

But there's a light at the end of the tunnel: once on-premise dining resumes, Adarkar expects the caps to be lifted, he told Business Insider. Until then, however, DoorDash will be charging customer fees "to recoup some of the costs related to price controls."

DoorDash has discussed the caps with various city officials and says none of them have discussed making the caps permanent, Adarkar told Business Insider in an interview Thursday. "All the commission caps in place today are tied to emergency orders, so when in-store dining resumes, our expectation is that these commission caps will fall away."

King of takeout

DoorDash holds the greatest share of the U.S. food delivery market, The Verge reported, around 48%, miles ahead of rivals like UberEats and Grubhub.

Though its revenue reached a fever pitch in 2020, some analysts criticized its IPO as lacking in value; they questioned how the brand would manage continued growth when demand for food delivery recedes, The Verge said. DoorDash leadership, however, remains unconcerned.

"We're growing faster than all of our U.S. peers. And we're the category leader in the food delivery space," Adarkar said.

On its first investor call, Adarkar and CEO Tony Xu said the company, founded in 2013, is finding success in expanding beyond restaurant delivery and partnering with retailers like CVS, Walmart, Macy's, and 7-Eleven.

Total DoorDash orders increased 233% to 273 million in the fourth quarter. Xu and Adarkar ascribe much of that growth to DashPass subscribers, its tier of users who pay about $10 a month for unlimited free deliveries on qualifying orders.

Gross profit tends to be higher DashPass subscribers than for free app users, Adarkar said; they spend more money more often. This is a plus both for DoorDash and for the restaurants shelling out extra to be listed as a DashPass merchant.

Adarkar did not disclose to Business Insider the company's current membership total, but said it's growing as DoorDash adds more merchants. In an S-1 filing last fall, it said it had about 5 million subscribers. 

Consider the Dashers

In November, California voted in support of Proposition 22, which ruled that app-based food delivery workers could remain categorized as independent contractors but could be entitled to additional protections, such as guaranteed minimum earnings.

In its earnings report, DoorDash noted the next quarter will be its first full quarter operating under Prop 22 "and ongoing price controls," which will likely negatively impact its EBITDA.

DoorDash will absorb most Prop 22-related costs, including minimum earnings for drivers, nicknamed Dashers, and additional benefits, so the company can continue prioritizing scale, Adarkar told analysts. Keeping consumer costs low will help merchants, because customers will want to order more, he explained.

Continued investments

In early February, DoorDash announced plans to buy Chowbotics, a vending machine-type robot capable of preparing custom salads, snacks and grain bowls in under a minute.

Adding Chowbotics to its portfolio will "pave the way for DoorDash merchants to add a new revenue channel with a delivery-only product," Adarkar said. "Stretch your imagination here: if you can have a machine mix a salad, you could extend that to other types of food."

Chowbotics' robot can also let restaurants test their menus in new markets. "They can access new geographies before they make these big investments to expand into a new state or to a new city," Adarkar said.

"We were excited by what we saw, we think this has a tremendous future, we love the vision that the team has, and it just makes a lot of sense for us," he said.