Grubhub Reports Fourth Quarter And Full Year 2019 Results

February 5, 2020
Grubhub generates 19% revenue growth in the fourth quarter

CHICAGO, Feb. 5, 2020 /PRNewswire/ — Grubhub Inc. (NYSE: GRUB), a leading online and mobile food-ordering and delivery marketplace, today announced financial results for the fourth quarter and full year ended December 31, 2019 and also posted a letter to shareholders on its investor relations website. For the fourth quarter, the Company reported revenues of $341 million, which is a 19% year-over-year increase from $288 million in the same period last year. Gross Food Sales grew 13% year-over-year to $1.6 billion, up from $1.4 billion in the fourth quarter of 2018.

“We strengthened both sides of our marketplace during the fourth quarter, adding 1.4 million active diners and more than doubling our restaurant selection from just a quarter ago,” said Matt Maloney, Grubhub founder and CEO. “We are making good progress on the key initiatives we outlined last quarter. We added more than 15,000 partnered and over 150,000 non-partnered restaurant options for our diners and we also launched a number of new loyalty programs for our restaurant partners.”

Fourth Quarter and Full Year 2019 Highlights
The following results reflect the financial performance and key operating metrics of our business for the three and twelve months ended December 31, 2019, as compared to the same periods in 2018.

Fourth Quarter Financial Highlights

  • Revenues: $341.3 million, a 19% year-over-year increase from $287.7 million in the fourth quarter of 2018.
  • Net Income (Loss): $(27.7) million, or $(0.30) per diluted share, a decrease from $(5.2) million, or $(0.06) per diluted share, in the fourth quarter of 2018.
  • Non-GAAP Adjusted EBITDA: $26.7 million, a 37% year-over-year decrease from $42.1 million in the fourth quarter of 2018.
  • Non-GAAP Net Income (Loss): $(4.2) million, or $(0.05) per diluted share, a decrease from $17.6 million, or $0.19 per diluted share, in the fourth quarter of 2018.

Fourth Quarter Key Business Metrics Highlights1

  • Active Diners: 22.6 million, a 28% year-over-year increase from 17.7 million Active Diners in the fourth quarter of 2018.
  • Daily Average Grubs (DAGs): 502,600, a 8% year-over-year increase from 467,500 DAGs in the fourth quarter of 2018.
  • Gross Food Sales: $1.6 billion, a 13% year-over-year increase from $1.4 billion in the fourth quarter of 2018.
1 Key Business Metrics are defined on page 29 of our Annual Report on Form 10-K filed on February 28, 2019.

Full Year Financial Highlights

  • Revenues: $1.3 billion, a 30% year-over-year increase from $1.0 billion in 2018.
  • Net Income (Loss): $(18.6) million, or $(0.20) per diluted share, a decrease from $78.5 million, or $0.85 per diluted share, in 2018.
  • Non-GAAP Adjusted EBITDA: $186.2 million, a 20% year-over-year decrease from $233.7 million in 2018.
  • Non-GAAP Net Income: $73.2 million, or $0.79 per diluted share, a 52% decrease from $153.3 million, or $1.66 per diluted share, in 2018.

Full Year Key Business Metrics Highlights1

  • Active Diners: 22.6 million, a 28% year-over-year increase from 17.7 million Active Diners in 2018.
  • Daily Average Grubs (DAGs): 492,300, a 13% year-over-year increase from 435,900 DAGs in 2018.
  • Gross Food Sales: $5.9 billion, a 17% year-over-year increase from $5.1 billion in 2018.

“We continue to innovate the online takeout industry with our recent launch of Grubhub Ultimate, a revolutionary, first-of-its-kind proprietary hardware and software solution that integrates all restaurant ordering channels into one system. Grubhub Ultimate is an important step in helping unlock the pickup market, which accounts for the majority of the more than $250 billion takeout industry,” said Adam DeWitt, Grubhub president and CFO. “We remain confident our overall strategy will deliver sustainable value for all of our stakeholders and the team is determined to continue to execute and build on the early wins.”

First Quarter and Full Year 2020 Guidance
Based on information available as of February 5, 2020, the Company is providing the following financial guidance for the first quarter and full year of 2020.

First Quarter 2020

Full Year 2020

(in millions)

Expected Revenue

$350 – $370

$1,400 – $1,500

Expected Adjusted EBITDA

$15 – $25

at least $100

Fourth Quarter 2019 Financial Results Conference Call
Grubhub will webcast a conference call tomorrow at 8:00 a.m. CT to discuss the fourth quarter 2019 financial results. The webcast can be accessed on the Grubhub Investor Relations website at https://investors.grubhub.com, along with the Company’s letter to shareholders, earnings press release and financial tables. A replay of the webcast will be available at the same website.

About Grubhub
Grubhub (NYSE: GRUB) is a leading online and mobile food-ordering and delivery marketplace with the largest and most comprehensive network of restaurant partners, as well as more than 22 million active diners. Dedicated to connecting diners with the food they love from their favorite local restaurants, Grubhub elevates food ordering through innovative restaurant technology, easy-to-use platforms and an improved delivery experience. Grubhub features over 300,000 restaurants and is proud to partner with more than 155,000 of these restaurants in over 3,200 U.S. cities and London. The Grubhub portfolio of brands includes Grubhub, Seamless, LevelUp, AllMenus and MenuPages.

Use of Forward Looking Statements
This press release contains forward-looking statements regarding Grubhub, “the Company’s” or our management’s future expectations, beliefs, intentions, goals, strategies, plans and prospects, including the expected benefits to, and financial performance of, Grubhub including its acquisitions. Such statements constitute “forward-looking statements”, which are subject to the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve substantial known and unknown risks, uncertainties and assumptions that could cause actual results, performance or achievements including, but not limited to, achievement of the benefits of our planned additional investments, to differ materially from any future results, performance or achievements expressed or implied by the forward-looking statements. Such risks and uncertainties include, but are not limited to, the matters set forth in the filings that we make with the Securities and Exchange Commission from time to time, including those set forth in the section entitled “Risk Factors” in our Annual Report on Form 10-K filed on February 28, 2019 and our most recent Quarterly Report on Form 10-Q for the quarter ended September 30, 2019, which are on file with the SEC and are available on the Investor Relations section of our website at https://investors.grubhub.com. Additional information will be set forth in our Annual Report on Form 10-K that will be filed for the year ended December 31, 2019, which should be read in conjunction with these financial results. Please also note that forward-looking statements represent management’s beliefs and assumptions only as of the date of this press release. Except as required by law, we disclaim any intention to, and undertake no obligation to, publicly update these forward-looking statements, or to update the reasons actual results could differ materially from those anticipated in the forward-looking statements, even if new information becomes available in the future.

Use of Non-GAAP Financial Measures
Adjusted EBITDA, non-GAAP net income and non-GAAP net income per diluted share attributable to common stockholders are financial measures that are not calculated in accordance with accounting principles generally accepted in the United States, or GAAP.

We define Adjusted EBITDA as net income adjusted to exclude acquisition, restructuring and certain legal costs, income taxes, net interest expense, depreciation and amortization and stock-based compensation expense. Non-GAAP net income and non-GAAP net income per diluted share attributable to common stockholders exclude acquisition, restructuring and certain legal costs, amortization of acquired intangible assets, stock-based compensation expense and other nonrecurring items as well as the income tax effects of these non-GAAP adjustments. We use these non-GAAP financial measures as key performance measures because we believe they facilitate operating performance comparisons from period to period by excluding potential differences primarily caused by variations in capital structures, tax positions, the impact of acquisitions, restructuring and certain legal costs, the impact of depreciation and amortization expense on our fixed assets and the impact of stock-based compensation expense. Adjusted EBITDA, non-GAAP net income and non-GAAP net income per diluted share attributable to common stockholders are not measurements of our financial performance under GAAP and should not be considered as an alternative to performance measures derived in accordance with GAAP.

See “Non-GAAP Financial Measures Reconciliation” below for a reconciliation of net income to Adjusted EBITDA, non-GAAP net income and non-GAAP net income per diluted share attributable to common stockholders.

GRUBHUB INC.

STATEMENTS OF OPERATIONS

(in thousands, except per share data)

Three Months Ended
December 31,

Year Ended
December 31,

2019

2018

2019

2018

Revenues

$

341,270

$

287,721

$

1,312,151

$

1,007,257

Costs and expenses:

Operations and support

190,328

144,082

675,471

454,321

Sales and marketing

86,100

69,877

310,299

214,290

Technology (exclusive of amortization)

29,164

24,972

115,297

82,278

General and administrative

28,018

27,393

101,918

85,465

Depreciation and amortization

32,488

24,153

115,449

85,940

Total costs and expenses

366,098

290,477

1,318,434

922,294

Income (loss) from operations

(24,828)

(2,756)

(6,283)

84,963

Interest expense – net

6,189

2,163

20,493

3,530

Income (loss) before provision for income taxes

(31,017)

(4,919)

(26,776)

81,433

Income tax (benefit) expense

(3,299)

231

(8,210)

2,952

Net income (loss) attributable to common stockholders

$

(27,718)

$

(5,150)

$

(18,566)

$

78,481

Net income (loss) per share attributable to common stockholders:

Basic

$

(0.30)

$

(0.06)

$

(0.20)

$

0.88

Diluted

$

(0.30)

$

(0.06)

$

(0.20)

$

0.85

Weighted-average shares used to compute net income (loss) per share attributable to common stockholders:

Basic

91,509

90,705

91,247

89,447

Diluted

91,509

90,705

91,247

92,354

KEY BUSINESS METRICS

Three Months Ended
December 31,

Year Ended
December 31,

2019

2018

2019

2018

Active Diners (000s)

22,621

17,688

22,621

17,688

Daily Average Grubs

502,600

467,500

492,300

435,900

Gross Food Sales (millions)

$

1,552

$

1,377

$

5,914

$

5,057

 

GRUBHUB INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

December 31,
2019

December   31,
2018

ASSETS

CURRENT ASSETS:

Cash and cash equivalents

$

375,909

$

211,245

Short-term investments

49,275

14,084

Accounts receivable, less allowances for doubtful accounts

119,658

110,855

Income tax receivable

3,960

9,949

Prepaid expenses and other current assets

17,515

17,642

Total current assets

566,317

363,775

PROPERTY AND EQUIPMENT:

Property and equipment, net of depreciation and amortization

172,744

119,495

OTHER ASSETS:

Other assets

26,836

14,186

Operating lease right-of-use asset

100,632

—

Goodwill

1,007,968

1,019,239

Acquired intangible assets, net of amortization

500,481

549,013

Total other assets

1,635,917

1,582,438

TOTAL ASSETS

$

2,374,978

$

2,065,708

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES:

Restaurant food liability

$

131,753

$

127,344

Accounts payable

26,748

26,656

Accrued payroll

19,982

18,173

Current portion of long-term debt

—

6,250

Current operating lease liability

9,376

—

Other accruals

61,504

44,745

Total current liabilities

249,363

223,168

LONG-TERM LIABILITIES:

Deferred taxes, non-current

27,163

46,383

Noncurrent operating lease liability

111,056

—

Long-term debt

493,009

335,548

Other accruals

817

18,270

Total long-term liabilities

632,045

400,201

STOCKHOLDERS’ EQUITY:

Common stock, $0.0001 par value

9

9

Accumulated other comprehensive loss

(1,628)

(1,891)

Additional paid-in capital

1,164,400

1,094,866

Retained earnings

330,789

349,355

Total Stockholders’ Equity

$

1,493,570

$

1,442,339

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$

2,374,978

$

2,065,708

 

GRUBHUB INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

Year Ended December 31,

2019

2018

CASH FLOWS FROM OPERATING ACTIVITIES

Net income (loss)

$

(18,566)

$

78,481

Adjustments to reconcile net income (loss) to net cash from operating activities:

Depreciation

30,237

21,647

Amortization of intangible assets and developed software

85,212

64,293

Stock-based compensation

72,879

55,261

Deferred taxes

(7,726)

1,724

Other

8,531

5,552

Change in assets and liabilities, net of the effects of business acquisitions:

Accounts receivable

(11,591)

(6,092)

Income taxes receivable

5,989

(1,356)

Prepaid expenses and other assets

(13,854)

(16,270)

Restaurant food liability

4,380

2,921

Accounts payable

1,978

11,160

Accrued payroll

1,804

3,621

Other accruals

23,349

4,585

Net cash provided by operating activities

182,622

225,527

CASH FLOWS FROM INVESTING ACTIVITIES

Purchases of investments

(85,989)

(57,197)

Proceeds from maturity of investments

51,366

67,166

Capitalized website and development costs

(48,524)

(31,180)

Purchases of property and equipment

(55,167)

(43,033)

Acquisition of other intangible assets

(9,980)

(11,851)

Acquisitions of businesses, net of cash acquired

127

(517,909)

Other cash flows from investing activities

(250)

—

Net cash used in investing activities

(148,417)

(594,004)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from the issuance of long-term debt

500,000

222,000

Repayments of borrowings under the credit facility

(342,313)

(53,906)

Proceeds from the issuance of common stock

—

200,000

Taxes paid related to net settlement of stock-based compensation awards

(23,753)

(35,599)

Proceeds from exercise of stock options

4,469

14,190

Payments for debt issuance costs

(9,136)

—

Net cash provided by financing activities

129,267

346,685

Net change in cash, cash equivalents, and restricted cash

163,472

(21,792)

Effect of exchange rates on cash, cash equivalents and restricted cash

320

(645)

Cash, cash equivalents, and restricted cash at beginning of year

215,802

238,239

Cash, cash equivalents, and restricted cash at end of the period

$

379,594

$

215,802

SUPPLEMENTAL DISCLOSURE OF NON-CASH ITEMS

Cash paid for income taxes

$

1,163

$

7,895

 

GRUBHUB INC.

NON-GAAP FINANCIAL MEASURES RECONCILIATION

(in thousands, except per share and per order data)

Three Months Ended
December 31,

Year Ended
December 31,

2019

2018

2019

2018

Net income (loss)

$

(27,718)

$

(5,150)

$

(18,566)

$

78,481

Income taxes

(3,299)

231

(8,210)

2,952

Interest expense – net

6,189

2,163

20,493

3,530

Depreciation and amortization

32,488

24,153

115,449

85,940

EBITDA

7,660

21,397

109,166

170,903

Acquisition, restructuring and legal costs

966

1,913

4,105

7,578

Stock-based compensation2

18,073

18,816

72,879

55,261

Adjusted EBITDA

$

26,699

$

42,126

$

186,150

$

233,742

Net income (loss) per order

$

(0.60)

$

(0.12)

$

(0.10)

$

0.49

Adjusted EBITDA per order

$

0.58

$

0.98

$

1.04

$

1.47

Three Months Ended
December 31,

Year Ended
December 31,

2019

2018

2019

2018

Net income (loss)

$

(27,718)

$

(5,150)

$

(18,566)

$

78,481

Stock-based compensation2

18,073

18,816

72,879

55,261

Amortization of acquired intangible assets

13,367

11,377

50,712

42,484

Acquisition, restructuring and legal costs

966

1,913

4,105

7,578

Income tax adjustments

(8,916)

(9,384)

(35,883)

(30,544)

Non-GAAP net income (loss)

$

(4,228)

$

17,572

$

73,247

$

153,260

Weighted-average diluted shares used to compute net income (loss) per share attributable to common stockholders

91,509

93,144

92,759

92,354

Non-GAAP net income (loss) per diluted share attributable to common stockholders

$

(0.05)

$

0.19

$

0.79

$

1.66

2 Stock-based compensation expense for the three months ended December 31, 2018 and the twelve months ended December 31, 2019 and 2018 included $4.8 million, $1.6 million and $4.8 million, respectively, of expense related to the accelerated vesting of equity awards to certain terminated acquired employees.

 

Guidance

Three Months Ended

 March 31, 2020

Low

High

(in millions)

Net loss

$

(36.0)

$

(28.5)

Income taxes

(12.1)

(9.6)

Interest expense – net

6.1

6.1

Depreciation and amortization

34.0

34.0

EBITDA

(8.0)

2.0

Acquisition, restructuring and legal costs

—

—

Stock-based compensation

23.0

23.0

Adjusted EBITDA

$

15.0

$

25.0

Note: For the full year 2020, we currently expect Adjusted EBITDA of at least $100 million, net interest expense of $25 million, depreciation and amortization expense of $145 million and stock-based compensation expense of $100 million.