Press Release Details

Grubhub Reports Third Quarter 2019 Results

10/28/2019
Grubhub generates 30% revenue growth in the third quarter

CHICAGO, Oct. 28, 2019 /PRNewswire/ -- Grubhub Inc. (NYSE: GRUB), the nation's leading online and mobile food-ordering and delivery marketplace, today announced financial results for the third quarter ended September 30, 2019 and also posted a letter to shareholders on its investor relations website. The Company reported revenues of $322 million, which is a 30% year-over-year increase from $247 million in the third quarter of 2018. Gross Food Sales grew 15% year-over-year to $1.4 billion, up from $1.2 billion in the same period last year.

"Our teams had another strong quarter of execution, adding nearly one million active diners and 15,000 restaurants to our platform," said Matt Maloney, Grubhub founder and CEO. "As we detail in our shareholder letter, we are entering the next phase of growth in the U.S. online food ordering industry where it is increasingly important to create a differentiated experience for diners and long-term value for restaurants. We are excited to leverage the robust profitability of our core business and best-in-class restaurant-facing products to grow our two-sided marketplace in a sustainable manner."

Third Quarter 2019 Highlights
The following results reflect the financial performance and key operating metrics of our business for the three months ended September 30, 2019, as compared to the same period in 2018.

Third Quarter Financial Highlights

  • Revenues: $322.1 million, a 30% year-over-year increase from $247.2 million in the third quarter of 2018.
  • Net Income: $1.0 million, or $0.01 per diluted share, a decrease from $22.7 million, or $0.24 per diluted share, in the third quarter of 2018.
  • Non-GAAP Adjusted EBITDA: $53.8 million, a 10% year-over-year decrease from $60.1 million in the third quarter of 2018.
  • Non-GAAP Net Income: $24.7 million, or $0.27 per diluted share, a decrease from $42.2 million, or $0.45 per diluted share, in the third quarter of 2018.

Third Quarter Key Business Metrics Highlights1

  • Active Diners: 21.2 million, a 29% year-over-year increase from 16.4 million Active Diners in the third quarter of 2018.
  • Daily Average Grubs (DAGs): 457,300, a 10% year-over-year increase from 416,000 DAGs in the third quarter of 2018.
  • Gross Food Sales: $1.4 billion, a 15% year-over-year increase from $1.2 billion in the third 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. 

"Last year, in the fourth quarter, we made opportunistic investments to expand delivery market coverage, increase new diner advertising and accelerate our enterprise brand sales efforts. Through the third quarter of 2019, we believe all three of these initiatives had a positive impact on our business and long-term shareholder value," said Adam DeWitt, Grubhub President and CFO. "Importantly, we demonstrated the ability to generate operating leverage consistently throughout 2019 with EBITDA per order increasing 31% from $0.98 in the fourth quarter of 2018 to $1.28 in the third quarter of 2019.  We are excited to embark on the initiatives detailed in the shareholder letter to further differentiate our marketplace for both restaurants and diners and position us for maintaining, and eventually improving, profitability."

Fourth Quarter 2019 Guidance
Based on information available as of October 28, 2019, the Company is providing the following financial guidance for the fourth quarter of 2019.



Fourth Quarter 2019




(in millions)


Expected Revenue range


$315 - $335


Expected Adjusted EBITDA range


$15 - $25


Third Quarter 2019 Financial Results Conference Call
Grubhub will webcast a conference call tomorrow at 8:00 a.m. CT to discuss the third 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 the nation's leading online and mobile food-ordering and delivery marketplace with the largest and most comprehensive network of restaurant partners, as well as the largest diner base. Dedicated to connecting diners with the food they love from their favorite local restaurants, Grubhub strives 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 140,000 restaurant partners in over 2,700 U.S. cities and London. The Grubhub portfolio of brands includes Grubhub, Seamless, LevelUp, Tapingo, 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, which is on file with the SEC and is available on the Investor Relations section of our website at https://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, 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
September 30,



Nine Months Ended
September 30,



2019



2018



2019



2018


Revenues

$

322,053



$

247,225



$

970,881



$

719,536


Costs and expenses:
















Operations and support


161,387




111,511




485,143




310,239


Sales and marketing


71,617




49,426




224,199




144,413


Technology (exclusive of amortization)


29,483




21,258




86,133




57,306


General and administrative


25,329




22,195




73,900




58,072


Depreciation and amortization


30,649




20,987




82,961




61,787


Total costs and expenses


318,465




225,377




952,336




631,817


Income from operations


3,588




21,848




18,545




87,719


Interest expense - net


6,025




337




14,304




1,367


Income (loss) before provision for income taxes


(2,437)




21,511




4,241




86,352


Income tax (benefit) expense


(3,447)




(1,234)




(4,911)




2,721


Net income attributable to common stockholders

$

1,010



$

22,745



$

9,152



$

83,631


Net income per share attributable to common stockholders:
















Basic

$

0.01



$

0.25



$

0.10



$

0.94


Diluted

$

0.01



$

0.24



$

0.10



$

0.91


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
















Basic


91,349




90,494




91,159




89,027


Diluted


92,847




93,678




92,850




92,091


 

KEY BUSINESS METRICS



Three Months Ended
September 30,



Nine Months Ended
September 30,



2019



2018



2019



2018


Active Diners (000s)


21,197




16,379




21,197




16,379


Daily Average Grubs


457,300




416,000




488,800




425,300


Gross Food Sales (millions)

$

1,400



$

1,215



$

4,362



$

3,680


 

GRUBHUB INC.


CONSOLIDATED BALANCE SHEETS


(in thousands, except share data)



















September 30,
2019



December   31,
2018


ASSETS








CURRENT ASSETS:








Cash and cash equivalents

$

394,000



$

211,245


Short-term investments


32,214




14,084


Accounts receivable, less allowances for doubtful accounts


123,309




110,855


Income tax receivable


2,227




9,949


Prepaid expenses and other current assets


18,632




17,642


Total current assets


570,382




363,775


PROPERTY AND EQUIPMENT:








Property and equipment, net of depreciation and amortization


160,368




119,495


OTHER ASSETS:








Other assets


25,452




14,186


Operating lease right-of-use asset


100,736





Goodwill


1,007,968




1,019,239


Acquired intangible assets, net of amortization


513,848




549,013


Total other assets


1,648,004




1,582,438


TOTAL ASSETS

$

2,378,754



$

2,065,708


LIABILITIES AND STOCKHOLDERS' EQUITY








CURRENT LIABILITIES:








Restaurant food liability

$

130,544



$

127,344


Accounts payable


23,392




26,656


Accrued payroll


22,537




18,173


Current portion of long-term debt





6,250


Current operating lease liability


8,056





Other accruals


59,686




44,745


Total current liabilities


244,215




223,168


LONG-TERM LIABILITIES:








Deferred taxes, non-current


28,681




46,383


Noncurrent operating lease liability


111,554





Long-term debt


492,776




335,548


Other accruals


817




18,270


Total long-term liabilities


633,828




400,201


STOCKHOLDERS' EQUITY:








Common stock, $0.0001 par value


9




9


Accumulated other comprehensive loss


(2,346)




(1,891)


Additional paid-in capital


1,144,541




1,094,866


Retained earnings


358,507




349,355


Total Stockholders' Equity

$

1,500,711



$

1,442,339


TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

2,378,754



$

2,065,708


 

GRUBHUB INC.


CONSOLIDATED STATEMENTS OF CASH FLOWS


(in thousands)













Nine Months Ended
September 30,




2019



2018


CASH FLOWS FROM OPERATING ACTIVITIES









Net income


$

9,152



$

83,631


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









Depreciation



21,665




16,189


Amortization of intangible assets and developed software



61,296




45,598


Stock-based compensation



54,806




36,445


Deferred taxes



(6,208)




2,048


Other



5,210




4,572


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









Accounts receivable



(13,335)




(17,969)


Income taxes receivable



7,722




(5,533)


Prepaid expenses and other assets



(11,955)




(15,455)


Restaurant food liability



3,247




1,608


Accounts payable



(50)




5,265


Accrued payroll



4,366




5,311


Other accruals



20,088




3,752


Net cash provided by operating activities



156,004




165,462


CASH FLOWS FROM INVESTING ACTIVITIES









Purchases of investments



(49,506)




(47,642)


Proceeds from maturity of investments



31,736




54,916


Capitalized website and development costs



(35,068)




(21,471)


Purchases of property and equipment



(42,702)




(31,984)


Acquisition of other intangible assets



(8,889)





Acquisitions of businesses, net of cash acquired



127




(366,856)


Other cash flows from investing activities



(250)




38


Net cash used in investing activities



(104,552)




(412,999)


CASH FLOWS FROM FINANCING ACTIVITIES









Proceeds from the issuance of long-term debt



500,000




175,000


Repayments of borrowings under the credit facility



(342,313)




(52,344)


Proceeds from the issuance of common stock






200,000


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



(20,503)




(28,238)


Proceeds from exercise of stock options



4,040




13,010


Payments for debt issuance costs



(9,136)





Net cash provided by financing activities



132,088




307,428


Net change in cash, cash equivalents, and restricted cash



183,540




59,891


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



(293)




(406)


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


$

399,049



$

297,724


SUPPLEMENTAL DISCLOSURE OF NON-CASH ITEMS









Cash paid for income taxes


$

567



$

7,508


 

GRUBHUB INC.

NON-GAAP FINANCIAL MEASURES RECONCILIATION

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



Three Months Ended
September 30,



Nine Months Ended
September 30,



2019



2018



2019



2018


Net income

$

1,010



$

22,745



$

9,152



$

83,631


Income taxes


(3,447)




(1,234)




(4,911)




2,721


Interest expense - net


6,025




337




14,304




1,367


Depreciation and amortization


30,649




20,987




82,961




61,787


EBITDA


34,237




42,835




101,506




149,506


Acquisition, restructuring and legal costs


1,312




3,024




3,139




5,665


Stock-based compensation


18,279




14,275




54,806




36,445


Adjusted EBITDA

$

53,828



$

60,134



$

159,451



$

191,616


















Net income per order

$

0.02



$

0.59



$

0.07



$

0.72


Adjusted EBITDA per order

$

1.28



$

1.57



$

1.19



$

1.65



































Three Months Ended
September 30,



Nine Months Ended
September 30,



2019



2018



2019



2018


Net income

$

1,010



$

22,745



$

9,152



$

83,631


Stock-based compensation


18,279




14,275




54,806




36,445


Amortization of acquired intangible assets


13,575




10,037




37,345




31,107


Acquisition, restructuring and legal costs


1,312




3,024




3,139




5,665


Income tax adjustments


(9,510)




(7,854)




(26,967)




(21,160)


Non-GAAP net income

$

24,666



$

42,227



$

77,475



$

135,688


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


92,847




93,678




92,850




92,091


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

$

0.27



$

0.45



$

0.83



$

1.47


 


Guidance



Three Months Ended
December 31, 2019



Low



High



(in millions)


Net loss

$

(44.8)



$

(33.9)


Income taxes


3.8




2.9


Interest expense - net


6.0




6.0


Depreciation and amortization


31.0




31.0


EBITDA


(4.0)




6.0


Acquisition, restructuring and legal costs






Stock-based compensation


19.0




19.0


Adjusted EBITDA

$

15.0



$

25.0


 

Grubhub logo (PRNewsfoto/Grubhub)

 

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SOURCE Grubhub Inc.

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