Press Release Details

Grubhub Reports Record Second Quarter Results

08-03-2017

Grubhub generates 32% revenue growth in the second quarter and announces strategic partnerships

CHICAGO, Aug. 3, 2017 /PRNewswire/ -- Grubhub Inc. (NYSE: GRUB), the nation's leading takeout marketplace, today announced financial results for the second quarter ended June 30, 2017. For the second quarter, DAGs grew 16% year over year, and the Company posted revenues of $158.8 million, which is a 32% year-over-year increase from $120.2 million in the second quarter of 2016. Grubhub also announced long-term partnerships with both Yelp and Groupon.

"Grubhub strives to be the most comprehensive marketplace connecting online takeout diners and restaurants. We continued to execute well in the second quarter, with strong active diner growth and thousands of new, high-quality restaurants," commented Grubhub CEO, Matt Maloney. "In addition, we signed long-term partnerships with Yelp and Groupon to be their preferred online ordering engine, agreeing to purchase Eat24 and select OrderUp markets in the process to add scale, diners and restaurants, and drive more volume to our restaurant partners."

Second Quarter 2017 Highlights

The following results reflect the financial performance and key operating metrics of our business for the three months ended June 30, 2017, as compared to the same period in 2016.

Second Quarter Financial Highlights

  • Revenues: $158.8 million, a 32% year-over-year increase from $120.2 million in the second quarter of 2016.
  • Net Income: $14.8 million, or $0.17 per diluted share, a 15% year-over-year increase from $12.8 million, or $0.15 per diluted share, in the second quarter of 2016.
  • Non-GAAP Adjusted EBITDA: $42.2 million, a 12% year-over-year increase from $37.6 million in the second quarter of 2016.
  • Non-GAAP Net Income: $23.2 million, or $0.26 per diluted share, a 19% year-over-year increase from $19.6 million, or $0.23 per diluted share, in the second quarter of 2016.

Second Quarter Key Business Metrics Highlights

  • Active Diners were 9.18 million, a 25% year-over-year increase from 7.35 million Active Diners in the second quarter of 2016.
  • Daily Average Grubs (DAGs) were 313,900, a 16% year-over-year increase from 271,100 DAGs in the second quarter of 2016.
  • Gross Food Sales were $880 million, a 20% year-over-year increase from $733 million in the second quarter of 2016.

"Our increased investment in marketing spend is yielding solid results in new diner acquisition, particularly in our smaller, less penetrated markets," said Grubhub CFO, Adam DeWitt. "In addition, Grubhub delivery continues to benefit from increasing economies of scale, driving our efficiency higher as we grow. We generated adjusted EBITDA of $1.48 per order, which was an increase compared to the seasonally stronger first quarter even though we increased sales and marketing investment 37% compared to the second quarter of last year."

Third Quarter and Full Year 2017 Guidance

Based on information available as of Aug. 3, 2017, the Company is providing the following financial guidance for the third quarter and full year of 2017. This guidance excludes any potential impact from the acquisitions of Eat24, OrderUp and Foodler, which have not yet closed, as well as any impact from partnerships with Yelp and Groupon:


Third Quarter 2017


Full Year 2017


(in millions)

Expected Revenue range

$155 - $163


$642 - $662

Expected Adjusted EBITDA range

$38 - $42


$170 - $180

Second Quarter 2017 Financial Results Conference Call 
Grubhub will webcast a conference call today at 3:30 p.m. CT to discuss the second quarter 2017 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 Aug. 17, 2017.

About Grubhub
Grubhub (NYSE: GRUB) is the nation's leading online and mobile takeout food-ordering marketplace with the most comprehensive network of restaurant partners and largest active diner base. Dedicated to moving eating forward and connecting diners with the food they love from their favorite local restaurants, the Company's platforms and services strive to elevate food ordering through innovative restaurant technology, easy-to-use platforms and an improved delivery experience. Grubhub is proud to work with more than 55,000 restaurant partners in over 1,200 U.S. cities and London. The Grubhub portfolio of brands includes Grubhub, Seamless, 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 completion of each of the acquisitions of Foodler, Eat24 and OrderUp, the expected benefits to, and financial performance of, Grubhub following such acquisitions and its strategic partnerships with Yelp and Groupon. 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 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, 2017, which is 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 June 30, 2017, 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 and restructuring costs, income taxes, 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 and restructuring 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 and restructuring, 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 "Schedule of 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

June 30,



Six Months Ended
June 30,



2017



2016



2017



2016


Revenues

$

158,794



$

120,173



$

314,928



$

232,413


Costs and expenses:
















Operations and support


62,924




40,696




122,443




75,683


Sales and marketing


34,770




25,355




70,208




54,188


Technology (exclusive of amortization)


14,076




10,567




27,268




20,759


General and administrative


14,515




12,158




27,475




25,747


Depreciation and amortization


10,414




8,885




20,454




16,193


Total costs and expenses


136,699




97,661




267,848




192,570


Income before provision for income taxes


22,095




22,512




47,080




39,843


Provision for income taxes


7,341




9,707




14,611




17,105


Net income attributable to common stockholders

$

14,754



$

12,805



$

32,469



$

22,738


Net income per share attributable to common stockholders:
















Basic

$

0.17



$

0.15



$

0.38



$

0.27


Diluted

$

0.17



$

0.15



$

0.37



$

0.27


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
















Basic


86,162




84,741




86,018




84,725


Diluted


87,700




85,749




87,410




85,724


 

KEY OPERATING METRICS



Three Months Ended
June 30,



Six Months Ended

June 30,



2017



2016



2017



2016


Active Diners (000s)


9,177




7,352




9,177




7,352


Daily Average Grubs


313,900




271,100




319,200




269,500


Gross Food Sales (millions)

$

879.7



$

732.6



$

1,777.8



$

1,445.4


 

GRUBHUB INC.


CONSOLIDATED BALANCE SHEETS


(in thousands, except share data)



























June 30, 2017



December 31, 2016


ASSETS








CURRENT ASSETS:








Cash and cash equivalents

$

293,269



$

239,528


Short term investments


80,291




84,091


Accounts receivable, less allowances for doubtful accounts


59,734




60,550


Prepaid expenses


8,819




12,168


Total current assets


442,113




396,337


PROPERTY AND EQUIPMENT:








Property and equipment, net of depreciation and amortization


56,673




46,555


OTHER ASSETS:








Other assets


4,060




4,530


Goodwill


436,455




436,455


Acquired intangible assets, net of amortization


308,257




313,630


Total other assets


748,772




754,615


TOTAL ASSETS

$

1,247,558



$

1,197,507


LIABILITIES AND STOCKHOLDERS' EQUITY








CURRENT LIABILITIES:








Restaurant food liability

$

81,718



$

83,349


Accounts payable


8,107




7,590


Accrued payroll


7,738




7,338


Taxes payable


499




865


Other accruals


16,086




11,348


Total current liabilities


114,148




110,490


LONG TERM LIABILITIES:








Deferred taxes, non-current


98,592




108,022


Other accruals


6,841




6,876


Total long term liabilities


105,433




114,898


STOCKHOLDERS' EQUITY:








Common stock, $0.0001 par value


9




9


Accumulated other comprehensive loss


(1,628)




(2,078)


Additional paid-in capital


826,019




805,731


Retained earnings


203,577




168,457


Total Stockholders' Equity

$

1,027,977



$

972,119


TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

1,247,558



$

1,197,507


 

GRUBHUB INC.


CONSOLIDATED STATEMENTS OF CASH FLOWS


(in thousands)













Six Months Ended June 30,




2017



2016


CASH FLOWS FROM OPERATING ACTIVITIES









Net income


$

32,469



$

22,738


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









Depreciation



5,092




3,327


Provision for doubtful accounts



148




420


Deferred taxes



(6,780)




(4,174)


Amortization of intangible assets



15,362




12,866


Stock-based compensation



15,438




12,406


Investment premium amortization



(395)




(202)


Other



124




518


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









Accounts receivable



784




(11,722)


Prepaid expenses and other assets



3,421




(3,315)


Restaurant food liability



(1,690)




4,278


Accounts payable



(978)




(858)


Accrued payroll



396




595


Other accruals



4,365




316


Net cash provided by operating activities



67,756




37,193


CASH FLOWS FROM INVESTING ACTIVITIES









Purchases of investments



(110,108)




(123,723)


Proceeds from maturity of investments



114,303




128,490


Capitalized website and development costs



(9,576)




(5,380)


Purchases of property and equipment



(7,291)




(8,362)


Acquisitions of businesses, net of cash acquired






(67,528)


Acquisition of other intangible assets



(5,000)




(250)


Other cash flows from investing activities



492




(576)


Net cash used in investing activities



(17,180)




(77,329)


CASH FLOWS FROM FINANCING ACTIVITIES









Repurchases of common stock






(14,774)


Proceeds from exercise of stock options



8,308




2,878


Excess tax benefits related to stock-based compensation






18,767


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



(5,523)




(938)


Payments for debt issuance costs






(1,477)


Net cash provided by financing activities



2,785




4,456


Net change in cash and cash equivalents



53,361




(35,680)


Effect of exchange rates on cash



380




(689)


Cash and cash equivalents at beginning of year



239,528




169,293


Cash and cash equivalents at end of the period


$

293,269



$

132,924


SUPPLEMENTAL DISCLOSURE OF NON CASH ITEMS









Cash paid for income taxes


$

13,805



$

3,250


 

GRUBHUB INC.

NON-GAAP FINANCIAL MEASURES RECONCILIATION

(in thousands, except per share data)



Three Months Ended

June 30, 2017



Six Months Ended
June 30,



2017



2016



2017



2016


Net income

$

14,754



$

12,805



$

32,469



$

22,738


Income taxes


7,341




9,707




14,611




17,105


Depreciation and amortization


10,414




8,885




20,454




16,193


EBITDA


32,509




31,397




67,534




56,036


Acquisition and restructuring costs


1,495




697




1,904




1,528


Stock-based compensation


8,195




5,505




15,438




12,406


Adjusted EBITDA

$

42,199



$

37,599



$

84,876



$

69,970



















Three Months Ended

June 30, 2017



Six Months Ended
June 30,



2017



2016



2017



2016


Net income

$

14,754



$

12,805



$

32,469



$

22,738


Stock-based compensation


8,195




5,505




15,438




12,406


Amortization of acquired intangible assets


5,100




5,640




10,373




10,685


Acquisition and restructuring costs


1,495




697




1,904




1,528


Income tax adjustments


(6,315)




(5,068)




(11,834)




(10,537)


Non-GAAP net income

$

23,229



$

19,579



$

48,350



$

36,820


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


87,700




85,749




87,410




85,724


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

$

0.26



$

0.23



$

0.55



$

0.43



















Guidance



Three Months Ended

September 30, 2017



Year Ended

December 31, 2017



Low



High



Low



High



(in millions)


Net income

$

11.0



$

13.4



$

55.1



$

61.0


Income taxes


7.5




9.1




37.5




41.6


Depreciation and amortization


11.0




11.0




43.0




43.0


EBITDA


29.5




33.5




135.6




145.6


Acquisition and restructuring costs








1.9




1.9


Stock-based compensation


8.5




8.5




32.5




32.5


Adjusted EBITDA

$

38.0



$

42.0



$

170.0



$

180.0


 

Grubhub logo. (PRNewsFoto/GrubHub)

 

View original content with multimedia:http://www.prnewswire.com/news-releases/grubhub-reports-record-second-quarter-results-300499441.html

SOURCE Grubhub Inc.

Dave Zaragoza, Corporate Finance & Investor Relations, ir@grubhub.com; Katie Norris, Press, press@grubhub.com

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