Press Release Details

GrubHub Reports Third Quarter Results

10/23/2014

Record revenues of $61.9 million, year-over-year growth of 51%

Chicago, IL – October 23, 2014 – GrubHub Inc. (NYSE: GRUB), the leading online and mobile food-ordering company, today announced financial results for the quarter ended September 30, 2014.

"GrubHub delivered strong third quarter results featuring record revenues and adjusted EBITDA driven by growth in all of our key business metrics," said Matt Maloney, CEO. "Due to the strength of our brand and effectiveness of our new brand campaign, growth in active diners remained strong even as we reduced overall advertising spend sequentially in the seasonally slow third quarter.”

Third Quarter 2014 Results

The following results reflect the financial performance and key operating metrics of our business for the three months ended September 30, 2014, compared to the non-GAAP pro forma combined results of Seamless Holdings and GrubHub Holdings for the three months ended September 30, 2013, giving effect to the August 2013 merger of the two companies.

Financial Highlights

  • Revenues: $61.9 million, a 51% year-over-year increase from $41.0 million in the third quarter of 2013.
  • Non-GAAP Adjusted EBITDA: $20.4 million, a 99% year-over-year increase from $10.3 million in the third quarter of 2013.
  • Net Income: $6.5 million, a 442% year-over-year increase from $1.2 million in the third quarter of 2013.
  • Our September 3rd 2014, Follow-On Offering included the sale of 1.25 million shares of our common stock at $40.25 per share, which generated $48.0 million in cash for the company (after fees and expenses).

Key Business Metrics Highlights

  • Active Diners were 4.57 million, a 50% increase from 3.05 million Active Diners in the third quarter of 2013.
  • Daily Average Grubs were 172,700, a 33% year-over-year increase from 129,800 Daily Average Grubs in the third quarter of 2013.
  • Gross Food Sales were $424 million, a 37% year-over-year increase from $309 million processed in the third quarter of 2013.

“Continued momentum from the roll-out of restaurant-driven pricing on the Seamless platform helped drive the sequential increase in both revenue and adjusted EBITDA despite the expected slowdown in activity in the third quarter,” noted Maloney. “We look forward to what should be a seasonally strong fourth quarter with increased activity and the ability to spend more on advertising efficiently.”

Third Quarter 2014 Guidance

Based on information available as of October 23, 2014, the company is providing the following financial guidance for the fourth quarter:

  • Revenue is expected to be in the range of $68.5 million to $70.5 million.
  • Adjusted EBITDA is expected to be in the range of $20 million to $22 million.

Third Quarter 2014 Financial Results Conference Call: GrubHub will webcast a conference call today at 9 a.m. CT to discuss the third quarter 2014 financial results. The webcast can be accessed on the GrubHub Investor Relations website at http://investors.grubhub.com, along with the company's earnings press release and financial tables. A replay of the webcast will be available at the same website until November 7, 2014.

About GrubHub

GrubHub Inc. (NYSE: GRUB) is the nation's leading online and mobile food ordering company dedicated to connecting hungry diners with local takeout restaurants. The company's online and mobile ordering platforms allow diners to order directly from approximately 30,000 takeout restaurants in more than 800 U.S. cities and London. Every order is supported by the company's 24/7 customer service teams.

Use of Forward Looking Statements:

This press release contains forward-looking statements regarding our management's future expectations, beliefs, intentions, goals, strategies, plans and prospects. 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 known and unknown risks, uncertainties and assumptions that could cause actual results, performance or achievements 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 Prospectus filed on September 5, 2014 and our most recent Quarterly Report on Form 10-Q for the quarter ended June 30, 2014, which are on file with the SEC and are available on the Investor Relations section of our website at http://investors.grubhub.com/. Additional information will be set forth in our Quarterly Report on Form 10-Q that will be filed for the quarter ended September 30, 2014, which should be read in conjunction with these financial results. Please also note that forward-looking statements represent our management's beliefs and assumptions only as of the date of this press release. Except as required by law, we assume 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 is a financial measure that is 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 merger and restructuring costs, income taxes, depreciation and amortization and stock-based compensation expense. We use Adjusted EBITDA as a key performance measure because we believe it facilitates operating performance comparisons from period to period by excluding potential differences primarily caused by variations in capital structures, tax positions, the impact of acquisitions and restructuring, the impact of depreciation and amortization expense on our fixed assets and the impact of stock-based compensation expense. Adjusted EBITDA is not a measurement of our financial performance under GAAP and should not be considered as an alternative to performance measures derived in accordance with GAAP.

See “Schedule of Non-GAAP Adjusted EBITDA Reconciliation - Pro Forma” below for a reconciliation of net income to Adjusted EBITDA.

Anan Kashyap
Corporate Finance & Investor Relations
ir@grubhub.com

Abby Hunt
Press
press@grubhub.com

NON-GAAP PRO FORMA FINANCIAL INFORMATION

On August 8, 2013, GrubHub Inc. acquired all of the equity interests of each of Seamless North America, LLC, Seamless Holdings and GrubHub Holdings (the “Merger”). The following Unaudited Pro Forma Condensed Statement of Operations was derived from the unaudited historical statement of operations of Seamless Holdings (Acquirer) for the three months ended September 30, 2013 and the unaudited historical statement of operations of GrubHub Holdings (Acquiree) for the three months ended September 30, 2013, adjusted for income taxes at the Company’s historical effective tax rate.

 

Three Months Ended September 30,

 

 

 

 

 

ProForma Combined

 

 

2014

 

 

2013

 

 

(in thousands)

 

Revenues

$

61,941

 

 

$

41,035

 

Costs and expenses:

 

 

 

 

 

 

 

Sales and marketing

 

14,883

 

 

 

10,427

 

Operations and support

 

14,902

 

 

 

11,234

 

Technology (exclusive of amortization)

 

6,560

 

 

 

5,089

 

General and administrative

 

8,143

 

 

 

7,616

 

Depreciation and amortization

 

5,748

 

 

 

4,055

 

Total costs and expenses

 

50,236

 

 

 

38,421

 

Income before provision for income taxes

 

11,705

 

 

 

2,614

 

Provision for income taxes

 

5,252

 

 

 

1,423

 

Net income

$

6,453

 

 

$

1,191

 

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

 

 

 

 

 

 

 

Basic

$

0.08

 

 

$

0.01

Diluted

$

0.08

 

 

$

0.01

 

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

 

 

 

 

 

 

 

Basic

 

79,426

 

 

 

54,809

 

Diluted

 

82,771

 

 

 

56,949

 

KEY PRO FORMA OPERATING METRICS

 

Three Months Ended
September 30,

 

 

Nine Months Ended September 30,

 

 

2014

 

 

2013

Pro Forma

 

 

2014

 

 

2013

Pro Forma

 

Active Diners (000s)

 

4,570

 

 

 

3,050

 

 

 

4,570

 

 

 

3,050

 

Daily Average Grubs

 

172,700

 

 

 

129,800

 

 

 

176,100

 

 

 

129,700

 

Gross Food Sales (millions)

$

423.8

 

 

$

309.2

 

 

$

1,279.4

 

 

$

915.8

 

 

 

GRUBHUB INC.

 

CONDENSED CONSOLIDATED BALANCE SHEETS - UNAUDITED

 

(in thousands, except share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 2014 (Unaudited)

 

 

December 31, 2013

 

ASSETS

 

 

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

 

 

Cash and cash equivalents

$

212,020

 

 

$

86,542

 

Short term investments

 

65,736

     

 

Accounts receivable, less allowances for doubtful accounts

 

42,690

 

 

 

29,304

 

Deferred taxes, current

 

3,844

 

 

 

3,688

 

Prepaid expenses

 

3,116

 

 

 

2,625

 

Total current assets

 

327,406

 

 

 

122,159

 

PROPERTY AND EQUIPMENT:

 

 

 

 

 

 

 

Property and equipment, net of depreciation and amortization

 

16,449

 

 

 

17,096

 

OTHER ASSETS:

 

 

 

 

 

 

 

Other assets

 

3,610

 

 

 

2,328

 

Goodwill

 

352,788

 

 

 

352,788

 

Acquired intangible assets, net of amortization

 

257,864

 

 

 

268,441

 

Total other assets

 

614,262

 

 

 

623,557

 

TOTAL ASSETS

$

958,117

 

 

$

762,812

 

LIABILITIES, REDEEMABLE COMMON STOCK AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

 

 

Restaurant food liability

$

91,719

 

 

$

78,245

 

Accounts payable

 

2,005

 

 

 

3,353

 

Accrued payroll

 

4,283

 

 

 

1,720

 

Taxes payable

 

249

 

 

 

1,768

 

Restructuring accrual

 

674

 

 

 

176

 

Other accruals

 

8,799

 

 

 

7,329

 

Total current liabilities

 

107,729

 

 

 

92,591

 

LONG TERM LIABILITIES:

 

 

 

 

 

 

 

Deferred taxes, non-current

 

98,862

 

 

 

90,495

 

Other accruals

 

5,636

 

 

 

3,936

 

Total long term liabilities

 

104,498

 

 

 

94,431

 

Commitments and Contingencies

 

 

 

 

 

 

 

Redeemable common stock, $0.0001 par value, no shares and 1,344,236 shares outstanding as of September 30, 2014 and December 31, 2013, respectively

 

 

 

 

18,415

 

STOCKHOLDERS’ EQUITY:

 

 

 

 

 

 

 

Series A Convertible Preferred Stock, $0.0001 par value

 

 

 

 

2

 

Common stock, $0.0001 par value.

 

8

 

 

 

5

 

Accumulated other comprehensive income

 

18

 

 

 

132

 

Additional paid-in capital

 

675,806

 

 

 

500,356

 

Retained earnings

 

70,058

 

 

 

56,880

 

Total Stockholders’ Equity

$

745,890

 

 

$

557,375

 

TOTAL LIABILITIES, REDEEMABLE COMMON STOCK AND STOCKHOLDERS’ EQUITY

$

958,117

 

 

$

762,812

 

 

 

GRUBHUB INC.

 

CONDENSED STATEMENTS OF OPERATIONS - UNAUDITED

 

(in thousands, except per share data)

 

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

2014

 

 

2013

 

 

2014

 

 

2013

 

Revenues

$

61,941

 

 

$

35,461

 

 

$

180,560

 

 

$

88,119

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

14,883

 

 

 

8,829

 

 

 

47,168

 

 

 

24,993

 

Operations and support

 

14,902

 

 

 

9,303

 

 

 

44,743

 

 

 

21,278

 

Technology (exclusive of amortization)

 

6,560

 

 

 

4,459

 

 

 

17,973

 

 

 

9,803

 

General and administrative

 

8,143

 

 

 

5,884

 

 

 

25,087

 

 

 

14,596

 

Depreciation and amortization

 

5,748

 

 

 

3,821

 

 

 

16,878

 

 

 

7,494

 

Total costs and expenses

 

50,236

 

 

 

32,296

 

 

 

151,849

 

 

 

78,164

 

Income before provision for income taxes

 

11,705

 

 

 

3,165

 

 

 

28,711

 

 

 

9,955

 

Provision for income taxes

 

5,252

 

 

 

1,111

 

 

 

15,213

 

 

 

4,822

 

Net income

$

6,453

 

 

$

2,054

 

 

$

13,498

 

 

$

5,133

 

Net income per share attributable to common stockholders:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

$

0.08

 

 

$

0.04

 

 

$

0.19

 

 

$

0.11

 

Diluted

$

0.08

 

 

$

0.03

 

 

$

0.17

 

 

$

0.10

 

Weighted average shares used to compute net income per share attributable to common stockholders:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

79,426

 

 

 

45,072

 

 

 

70,893

 

 

 

35,936

 

Diluted

 

82,771

 

 

 

63,114

 

 

 

80,826

 

 

 

49,942

 

 

GRUBHUB INC.

 

CONDENSED STATEMENTS OF CASH FLOWS - UNAUDITED

 

(in thousands)

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30,

 

 

2014

 

 

2013

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

 

Net income

$

13,498

 

 

$

5,133

 

Adjustments to reconcile net income to net cash from operating activities:

 

 

 

 

 

 

 

Depreciation

 

3,708

 

 

 

2,123

 

Provision for doubtful accounts

 

232

 

 

 

178

 

Loss on disposal of fixed assets

 

11

     

 

Deferred taxes

 

8,211

 

 

 

(1,971

)

Intangible asset amortization

 

13,170

 

 

 

5,371

 

Tenant allowance amortization

 

(119

)

 

 

(119

)

Stock based compensation

 

6,981

 

 

 

3,024

 

Deferred rent

 

16

 

 

 

(87

)

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

 

 

 

 

 

 

 

Accounts receivable

 

(13,618

)

 

 

(8,035

)

Prepaid expenses and other assets

 

(1,773

)

 

 

(1,827

)

Accounts payable

 

(1,348

)

 

 

1,262

 

Restaurant food liability

 

13,474

 

 

 

19,184

 

Accrued payroll

 

2,563

 

 

 

1,148

 

Other accruals

 

2,252

 

 

 

(2,784

)

Net cash provided by operating activities

 

47,258

 

 

 

22,600

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

 

Cash acquired in merger of GrubHub Holdings Inc.

 

     

13,266

 

Capitalized website and development costs

 

(2,396

)

 

 

(1,939

)

Purchases of property and equipment

 

(3,189

)

 

 

(3,828

)

Purchases of investments

 

(65,736

)    

 

Net cash used in investing activities

 

(71,321

)

 

 

7,499

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

 

Net proceeds from the issuance of common stock

 

142,936

 

 

 

 

Proceeds from exercise of stock options

 

4,656

 

 

 

565

 

Excess tax benefit related to stock-based compensation

 

4,569

     

 

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

 

(2,061

)

 

 

 

Repurchases of common stock

 

(116

)

 

 

(1,259

)

Preferred stock tax distributions

 

(320

)

 

 

(1,893

)

Net cash provided by (used in) financing activities

 

149,655

 

 

 

(2,690

)

 

 

 

 

 

 

 

 

Net change in cash and cash equivalents

 

125,592

 

 

 

27,409

 

Effect of exchange rates on cash

 

(114

)

 

 

47

Cash and cash equivalents at beginning of year

 

86,542

 

 

 

41,161

 

Cash and cash equivalents at end of the period

$

212,020

 

 

$

68,617

 

 

 

 

 

 

 

 

 

SUPPLEMENTAL DISCLOSURE OF NON CASH ITEMS

 

 

 

 

 

 

 

Fair value of common and preferred stock issued in
acquisition of GrubHub Holdings Inc

 $

   $  421,485

Cash paid for income taxes

1,324

 

 

2,584

 


NON-GAAP ADJUSTED EBITDA RECONCILATION – PRO FORMA

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

2014

 

 

2013

Pro Forma

 

 

2014

 

 

2013

Pro Forma

 

 

(in thousands)

 

Net income

$

6,453

 

 

$

1,191

 

 

$

13,498

 

 

$

2,111

 

Income taxes

 

5,252

 

 

 

1,423

 

 

 

15,213

 

 

 

2,548

 

Depreciation and amortization

 

5,748

 

 

 

4,055

 

 

 

16,878

 

 

 

9,030

 

EBITDA

 

17,453

 

 

 

6,669

 

 

 

45,589

 

 

 

13,689

 

Merger and restructuring costs

 

670

 

 

 

1,701

 

 

 

1,162

 

 

 

9,131

 

Stock-based compensation

 

2,294

 

 

 

1,905

 

 

 

6,981

 

 

 

3,915

 

Adjusted EBITDA

$

20,417

 

 

$

10,275

 

 

$

53,732

 

 

$

26,735

 

SOURCE GrubHub Inc.

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