John (5:42)

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Ann Berry (5:59)

today to earnings reports from two consumer facing companies that are trying to get a beat on the consumer. They're trying to get a handle on affordability and figure out how to do it all better with Agentic AI. So for Walmart and DoorDash, it's now a battle for the driveway. We're going to cover Walmart in just a moment. I'm so excited. It's one of my favorite stocks. But let's start off with DoorDash, the largest food delivery app in the United states covering over 60% of the domestic market with some real international clout as well. So John, let's dig into the details from those earnings.

John (6:30)

All right, let's start with DoorDash Ticker Dash on the NASDAQ market cap.

Ann Berry (6:35)

Yes, exactly.

John (6:36)

Market cap of $77 billion. Fourth quarter highlights. They posted revenue of $4 billion which was up 38% year over year but just missed estimates. Adjusted earnings per share of $0.48. Missed estimates by about $0.10. And this is an important metric the marketplace Gov, that's gross order value. Essentially that's what the consumer is paying on the platform. It was nearly $30 billion last quarter, up 39% year over year. And the GO outlook given for this quarter came in above estimates. So even with those misses on revenue and earnings, shares were up nearly one and a half to 2% today.

Ann Berry (7:13)

Because that really does show, right that gov that gross order value is really the indication of how much people are engaging with and using the platform. But of course the revenue is a big it's the fee that DoorDash takes off. It will come back to those fees in a moment. They're my bugbear. Well, let's talk about the earnings myths and a big driver of that was frankly investment. The company said that it's R and D, that's research and development costs rose 41% in 2025. And it's interesting, John, to see where those R and D dollars are going, because DoorDash did say it's ramping up investment in autonomous vehicles, which by the way, includes robots and drones.

John (7:49)

I found that interesting that they called drones autonomous, because I guess they can. They can chart their own path now. I haven't thought about that, but we have been seeing the DOT rolled out. We've. It's been rolled out in certain markets. That's that delivery Robot. It's for DoorDash. It's red and it goes down the street. And some people, it.

Ann Berry (8:08)

It's so fun. So, John, you saw I posted about this on, like, Instagram or something. I just saw, and I really can't remember whether it was the Economist or it was the ft, whoever it was, but it literally was a picture of one of these robots coming down the sidewalk. And the tag was, Americans are angry and they're taking it on delivery robots. And apparently there have been attacks on delivery robots. And it's not as though people are stealing what's the food inside it. They just want to express fury and they're taking it out in the robot. So I thought that was a very strange story, but I'm glad that you enjoyed seeing it in my Instagram. Yeah. Walmart and Amazon, by the way, also expanding drone delivery. So there's going to be a battle for the skies, it seems, as much as for our driveways when it comes to these various delivery elements of retail. Well, DoorDash did not break out the cost of these robots, but it did say last year that it plans to spend, quote, several hundred million dollars more in new initiatives and in platform development in 2026. So I guess we're seeing the lead indicator, 2025 ramping up and more to come this year.

John (9:10)

Yeah, lots of R and D. And part of that development is integrating the three delivery services that DoorDash operates around the globe. Of course, there's DoorDash here and then Walt and Delivery you into one platform. Have you ever heard of delivery?

Ann Berry (9:23)

Deliveroo Delivery, we have in the UK.

John (9:26)

Yes, yes, exactly. UK DoorDash completed its acquisition of Deliveroo Deliver. What is it?

Ann Berry (9:33)

Delivery, like Kangaroo, but Deliveroo.

John (9:35)

Yeah, because I was like, is that going to be in Australia and then based out of London, I read.

Ann Berry (9:39)

Well, close cousins.

John (9:40)

Exactly. So Deliveroo, last October, it was a $4 billion acquisition. And Walt is a Finnish company that DoorDash acquired in 2022. So DoorDash trying to get all of those different assets under one platform.

Ann Berry (9:52)

And the key there, it's so interesting. I always find this interesting. The market said, okay, we understand why you're doing this, but it does mean that there are going to be two things associated with that integration. Things are, by the way, so easy to say and so to do in practice. Integrating different businesses like this to get them on a single platform so your systems are the same, the data's, you know, similar and therefore minable to get insights into costs, real money, number one, and so there's the economic cost of doing it. And number two, because I've just seen this in other companies, I cannot explain to you how time intensive and how much focus that sort of project managers who are trying to do their day jobs because they're the domain experts in what they're doing and therefore the best position to opine on how to integrate the technology, they end up doing two full time jobs at the same time. So it's a distraction often for your core business and done for too long or done inefficiently can create real issues when it comes to execution. So something the market is looking out for there. Well, on the earnings call, co founder and CEO Tony Xu highlighted a future with agentic commerce where bots make purchases on human users, assuming you hand over there for your login details and also some sort of payment details as well.

John (11:02)

Right, Exactly. And I saw this in an advertisement that aired recently, the promise of it at least, where there was a woman speaking to the AI in her house and she said, I'm having a dinner party tonight. Two of the attendees are like steak and two of them are vegetarians. So order me dinner tonight from wherever you want to account for all these different needs. And that was the idea. And the idea in this ad was that the AI would decide and pick a restaurant, which I don't know if that's the future of an agentic AI. Of course that could be interesting for a company like Doordash, where what company is their bot gonna choose? Is it a company that they might have a deal with? Or there's another thing that Doordash has been getting into, which is ghost kitchens.

Ann Berry (11:47)

Yes.

John (11:48)

And I didn't even realize until I was reading today that they have a ghost kitchen in Brooklyn with that scenario where the woman says, I'm having a party. Maybe all that food comes from the same kitchen that's nearby.

Ann Berry (12:01)

You know, it's so interesting. So two things you just said there sort of remind me actually of other companies and I love having these conversations because at some point all of these sort of company stories turn into exercises and pattern spotting. Right. And what you just said, at some point there could be a bot where we go to maybe some LLM, whether it's Claude, whether it's Gemini, whether it's ChatGPT and say this is my vision for dinner. Go order the food. Who does it go to? Well, Booking had its earnings out today, right. The travel booking platform. And the same exact question came up which is if bots are going to be deployed to book an itinerary, which where will they go in order to transact? And Booking said, look, we're really well positioned because we're trusted and we've got the right inventory. So very similar to what you just said. The other thing too, there's Ghost Kitchens scenario. I've sort of seen that movie before. And the person who's moved into that recently is Marc Lawre who started Jet.com sold it to Walmart with Wonder. Have you seen Wonder Kitchen? That was everywhere. One down the street, one down the street. That started as a ghost kitchen. I ended up I think buying grubhub or Seamless. And so now it has become a hybrid of the ghost kitchen plus house, rather like DoorDash where you can go and get your takeout from actual standalone restaurants. So again, pattern spotting. You sort of see some of the same attempts to figure out a long term strategy popping on up. Some interesting things coming out of this. There has been some political or cultural pushback on DoorDash. Right. They take 15 to 30 in fees from the restaurant and there has been a movement that's asked, can people make livings off this platform? Both the delivery. Exactly. Folks who work as gig economy workers with DoorDash, but also the actual restaurants themselves who are feeling squeezed.

John (13:37)

And so it's interesting to think that maybe DoorDash is saying, well, we're not going to squeeze the restaurants, we'll just start using our own. Which they said in a quote today in 2025 we also generated nearly $75 billion in sales for local merchants across our 40 countries and over $20 billion in earnings for Dashers. So the company pointing out that they, they see themselves as a positive in these areas.

Ann Berry (13:59)

Yeah. One question I have is for the longest time I didn't use DoorDash because I just felt as though I couldn't stomach paying. Particularly when you live in a dense urban environment like New York. The idea that I would go and pay $15 in delivery fees plus a bunch of tax plus of course provide a tip, you could easily get to 20 bucks in fees. I'm like, how lazy am I that I'm just not going to walk a couple of blocks to go pick up some food. But it does sort of beg the question, at least to me. We keep talking about consumers facing an affordability crisis. How on earth is that manifesting when you've got doordash with all of its very high fees getting the kind of growth that it's getting? I mean that's the question that I've got. Is con really worth that much when the consumer is feeling the hit from inflation?

John (14:43)

Still, I know we've heard this joke about different generations where the next generation is broke because they were eating avocado toast. That's why they don't own homes and stuff. And I think doordash gets that reputation too. If people are paying $20 in fees to get a coffee, you know, it's exaggerated but maybe that's why the next generation doesn't have savings.

Ann Berry (15:01)

Well, maybe they're using, everyone's using their time to go and actually earn more money than they're paying. Delivery for opportunity, cost of time. Well, shares up over one and a half percent today. It did bounce around at one point up over 5% which again is really interesting when you consider that from a pure play it did miss estimates this business. So the market is really saying we're taking a flyer on what is to come when you're through this integration and we see the yield to that investment in R D assuming that it's going to stimulate more growth for that business. Well, let's move on and take a look at Walmart and see how it fared in its most recent quarter. The share price was bouncing around all day. I was like watching it.

John (15:36)

Yes.

Ann Berry (15:37)

And it really, it really sort of dropped like a rock at the beginning of the trading session and then sort of came back up market cap a trillion dollars. Walmart took a wmt. I mean it's just amazing. It's huge scale.

John (15:48)

And the fourth quarter earnings revenue of $191 billion slightly beat estimates. It was up 5 and a half percent year over year and adjusted earnings per share of 74 cents beat estimates by a penny. And it was a narrow beat. But what got the market headline today was softer than expected. Full year guidance. Net sales growth is going to be slower than in prior years. And the company expressed caution on consumer spending.

Ann Berry (16:10)

So this to me is a conundrum. Just to go back to doordash for a moment, Walmart Sees everything look scale a trillion dollars in market cap massive in America's biggest retailer, right? And no one has a better vantage point from which to opine on the consumer. Especially by the way, since Walmart's been appealing to a much broader array of consumers than before. Every sort of demographic is shopping there now, whether it's the higher income demographic looking for value, whether it's a slightly lower income demographic wanting to go get the benefit of its everyday low prices. Walmart has an amazing vantage point and they're saying caution on consumer spending. So I try to squ that John with doordash which is saying we're going to grow and the market's buying it right with that share price up. But it just sort of begs the question which one is really the bellwether for consumer sentiment and consumer spending? Just one piece that sort of maybe tweaks that Walmart does tend to be conservative with its full year guidance. And just one thing to note, it is the first earnings report under the new CEO John Furner. Now again, earnings are backward looking so he wasn't CEO generating these earnings. But I can understand why he'd want to perhaps be a little more conservative with his four year guidance in his first year on the seat so that he can manage expectations and beat them if possible. Over deliver, over deliver. He did note on the earnings call that quote, while spending remains resilient in the United States, consumers are choiceful. Something that we heard a lot last year by the way, and that much of the company's market share gains continue to come from households making more than $100,000 again. So a very interesting set of almost contradictory data points here on the consumer.

John (17:46)

This is something interesting I saw today. The CFO of Walmart, John David Rainey, was on YACH this morning and he was asked what the company might expect when people in this quarter get their tax returns and if they get a rebate back. And I did my mom's taxes over the last weekend. She's elderly, been retired for a long time and this is just a side thing that we're going to start seeing and maybe it'll play out in other businesses. The big beautiful bill has a new credit for folks over 65 and she was a recipient of that and it swayed what she had been paying in previous years, years to, to getting a refund of over $1,000.

Ann Berry (18:23)

That's real money.

John (18:23)

That's real.

Ann Berry (18:24)

That's real money.

John (18:25)

It's real money. And so we might start seeing that show up in this quarter if people have some extra spending money to take to Walmart.

Ann Berry (18:32)

Well, the other piece too is when that money gets spent, where does it potentially drive a push up in prices or inflation because it's a form of fiscal stimulus. CFO, again, Rainey said food inflation was less than 1% and certain food products that are really the great indicators of that egg prices have come down appreciably. I'd be noticing that too, actually, in Trader Joe's because I do remember during the $12 cartons. Ridiculous. So it's down to something more manageable. Well, analysts on the call wanted to know how Walmart is incorporating AI, including of course, agentic AI. The company said that half of its Walmart app users now have used Sparky. Love that name, the AI chatbot. Most interesting though, that Walmart is willing to give real numbers and real. They're saying that the Average order is 35% higher after using Sparky. I think there's still a long road before we get sustainable data coming out of it. But the fact that companies are now starting to be willing to share kinds of tangible nuggets of tangible data I find sort of promising. And they get feeling pressured to do it. People are saying, sure, you're investing in this stuff. You got to show us what it's doing.

John (19:37)

I want to see a return. Walmart's E Commerce sales grew 24% from a year ago. And now at Walmart again on the call, 1/3 of orders are delivered in under three hours. I mean, I remember when you'd go to Amazon because Walmart might take a week to get you a product. And now they say that 95% of America can get delivery in under three hours.

Ann Berry (19:58)

Well, speaking of Amazon, the headline today that Amazon dethroned Walmart as the largest global company when it comes to revenue, that got a little bit of attention. For 2025, Amazon hit $717 billion in sales. Walmart $713 billion in sales. I was about to say it's very close, but it's still a $4 billion difference. Right. That's like massive for any other company. Of course, Amazon does have a major cloud computing business. So when you just pass it and you just look at retail alone, Walmart is actually still in the lead.

John (20:30)

And one final note, that Walmart announced its annual dividend will be increased for the 53rd consecutive year.

Ann Berry (20:38)

That's brilliant. Well, I hold Walmart stocks. I'm always happy to hear that. The shares, as I said, bounced around today. It eventually did end up net down, down one and a half percent. Clearly that slightly soft outlook for the consumer market wasn't very happy about that. Again, given Walmart's scale, the stock though could afford to give a little bit back. It has gained about 13% this year. Well, let's take a break and when we come back, we'll take a spin through the headlines that are moving the markets today. Producer JOHN I want to set you up.

John (21:04)

All right. Well, I'm not on the market, but either way, I don't know if I trust you in that department.

Ann Berry (21:07)

Oh yeah. Well, would you trust a matchmaker who uses AI to comb through a date database of people who meet all of your criteria?

John (21:14)

Actually, yeah, that sounds great.

Ann Berry (21:15)

Well, that's what sitch matchmaking does. It was designed specifically for the high intent datas out there, such as detailed onboarding gets to know exactly what you're looking for and your non negotiables.

John (21:25)

Okay, well my non negotiables include being a good pet parent and having an up to date will and testament specific.

Ann Berry (21:31)

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Ann Berry (22:14)

There it is, the closing bell. It's 4pm on the east coast, the markets wrapping up for the day. We don't have a ticker tape, but we'll throw it over to our producer John, our human ticker.

John (22:23)

That's right. The S&P 500 and the NASDAQ each finished down about a third of a percent and the Dow was down nearly half a percent today. Today some market headlines. Shares in the Avis Budget Group ticker car were down nearly 25% today after the company reported lower quarterly revenue and an impairment charge tied to the U.S. electric vehicle rental fleet. The company ended the quarter with revenue of $2.7 billion and a net loss of 856 million, 60% of which was tied to that EV. Write down that's a non cash hit. But the market is still unimpressed with the message it sends, which is that electric rental vehicles have a relatively short

Ann Berry (23:00)

useful life and code for spend may be coming in the future to buy replacement vehicles. Meanwhile, we saw shares in Carvana ticker CVNA down as much as 10% today. That's after the online used car marketplace reported frankly mixed quarterly results. We saw gross profit per per vehicle declining coming in below analysts estimates due in part to higher reconditioning costs. So sort of a mixed bag over there.

John (23:26)

Right. And the company also chalked up the mist to growing pains. CEO Ernest Garcia III said in a call with analysts quote, we've grown quickly. We were hiring new managers and kind of moving around some management layers to put us in a position to continue to grow quickly. And sometimes that leads to a little backsliding. Carvana's retail sales hit a record for the quarter and the year, but share prices down 25% since its 52 week high just last month.

Ann Berry (23:50)

Moving around management, I'm not quite sure what that means. Let's go and look at the org chart now. And we couldn't, couldn't leave a loan. Private Credit today so just a bit context on this. The drum beat has been getting louder around the asset class for the past six months and worries about it. And that's actually for a variety of reasons. We go back to September last year. The bankruptcy of auto parts maker First Brands prompted concerns over the quality of private lenders deals. Then we've seen the software sell off which has prompted fears that too much private debt is sitting in a sector the AI may be, if not eating alive, then at least nibbling at. And then today private credit giant Blue Owl said that one of its funds in which retail investors were actually able to put their money, which isn't that common, has stopped letting investors get their cash out through quarterly redemptions and has moved instead to the fund distributing cash out from time to time when the fund actually gets cash in from asset sales and loan repayments. So the regularity has gone away. Now it's actually when cash is moving.

John (24:50)

And the move stoked fears about the private credit world yet again, prompting the stocks of rival alternative asset managers to drop, including Ares, Apollo Global Management, Blackstone, KKR and tpg. Mohamed El Erian, former CEO of Pimco raised the question on X as to whether this is, quote, a canary in the coal mine moment for private credit.

Ann Berry (25:09)

So Mohamed El Erian is a very, very well known personality in this space and he's the CEO, as John said of Pimco, which is a big seat. When he decided to make that post today, that was, I'm telling you, a conscious decision for him to ask, is this a canary in a coal mine? That is a voice people listen to. And so we are not only going to keep watching this one because it's interest interesting, but because it is actually going to take a minute to settle. We need to hear more from Blue out on why it made the decision, what's sitting specifically in that fund. So we're going to keep tracking this to get more clarity and we will absolutely be coming back to this topic of Private Credit with a broad sweep of what's going on inside its magical mystery world. Well, before we go, I wanted to just share a quick plug for our short show tomorrow because it is a great conversation with Scott Blackley, the CFO of Oscar Health here. Now, lots of people's eyes glaze over. I know when it comes to health insurance stocks, but we all use health insurance. The product isn't going anywhere, which we love as investors. And policy change is afoot, some politically driven in this midterm election year, some stemming from technology, some stemming from consumer preferences. And Scott does a fantastic job of breaking these forces down in a substantive but dynamic and engaging way. So join us tomorrow when we're going to bring the world of health insurance to life. That's it for today's Brew Markets Daily.

John (26:32)

Brew Markets Daily is hosted by Anne Barry and produced by John Crateau, Tarkab Delatif, and Emily Millarn. Our technical director is Uchena Waugh. Jim Orso is our audio engineer. The president of Morning Brew Inc. Is Devin Emery. If you have any feedback or a company you'd like us to COVID leave a comment or send an email to brewmarketshoworningbrew.com Wake up tomorrow with the Morning

Ann Berry (26:50)

Brew newsletter and tune in to Neil and Toby on Morning Brew Daily. We'll see you back here tomorrow again for that great conversation. Same time, same same place.