DoorDash forecast first-quarter core profit largely below estimates and reported a wider-than-expected quarterly loss on Thursday, signaling higher costs were offsetting the benefits from a surge in delivery orders, sending its shares down 7% in extended trading.

The delivery firm has been grappling with elevated labor costs as well as stiff competition from rivals UberEats and Instacart.

To attract more customers, it has been heavily investing in marketing and expanding out of its core restaurant delivery business to newer categories such as grocery, convenience and alcohol.

DoorDash expects current-quarter adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) between $320 million and $380 million, mid-point of which is below LSEG estimates of $355.3 million.

"Expectations for DoorDash may have been a bit inflated on the heels of Uber's earnings," said Insider Intelligence analyst Blake Droesch.

DoorDash expects 2024 adjusted EBITDA between $1.5 billion and $1.9 billion, mid-point of which is above expectations of $1.63 billion, according LSEG data.

"We have been able to continue attracting new consumers and driving higher consumer engagement for the simple reason that our service continues to get better," CEO Tony Xu wrote in a letter to shareholders.

Total orders in the fourth quarter rose 23% to 574 million from a year earlier, but its costs and expenses climbed 9.3%.

The company reported a loss of 39 cents per share, compared with analysts estimates of a loss of 16 cents.

It expects 2024 gross order value (GOV) - a key metric that shows the total value of all app orders and subscription fees - between $74 billion and $78 billion, compared with $66.8 billion in 2023.

The company also authorized up to $1.1 billion in share repurchases.

Fourth-quarter revenue rose 26.7% to $2.30 billion, compared with estimates of about $2.24 billion.

  - Reuters