Press Release Details

GrubHub Reports Second Quarter Results

07/24/2014

Record revenues of $60.0 million, growth of 48%

Chicago, IL – July 24, 2014 – GrubHub Inc. (NYSE: GRUB), the leading online and mobile food-ordering company, today announced financial results for the quarter ended June 30, 2014.

"GrubHub continued to execute against the large opportunity in takeout in the second quarter, driving significant year over year growth in revenues, adjusted EBITDA, and all of our key metrics," said Matt Maloney, CEO. "We generated record revenues in the second quarter despite both an expected seasonal slowdown and an unusually cold winter that drove record orders in the first quarter.”

Second Quarter 2014 Results

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

Financial Highlights

  • Revenues: $60.0 million, a 48% year-over-year increase from $40.7 million in the second quarter of 2013.
  • Non-GAAP Adjusted EBITDA: $16.9 million, a 56% year-over-year increase from $10.8 million in the second quarter of 2013.
  • Net Income: $2.7 million, a 930% year-over-year increase from $0.3 million in the second quarter of 2013.

Key Business Metrics Highlights

  • Active Diners grew 51% to 4.19 million, compared to 2.78 million active diners in the second quarter of 2013.
  • GrubHub Inc. processed 174,500 Daily Average Grubs, a 34% year-over-year increase from 130,100 Daily Average Grubs in the second quarter of 2013.
  • GrubHub Inc. processed $423 million in gross food sales, a 38% year-over-year increase from $307 million processed in the second quarter of 2013.

“We’re pleased with the initial roll-out of restaurant-driven pricing to the Seamless brand in April, which had a positive impact on overall commission rates during the quarter,” noted Maloney. “In addition, by maintaining our seasonally higher first quarter advertising spending in the second quarter, we continued to add new diners at a healthy rate, particularly in areas outside of our largest markets.”

Third Quarter 2014 Guidance

Based on information available as of July 24, 2014, the company is providing the following financial guidance for the third quarter:

  • Revenue is expected to be in the range of $55.5 million to $57.5 million.
  • Adjusted EBITDA is expected to be in the range of $13 million to $15 million.

Second Quarter 2014 Financial Results Conference Call: GrubHub will webcast a conference call today at 9 a.m. CT to discuss the second 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 August 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 700 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 Private Securities Litigation Reform Act of 1995. The outcome of the matters covered by such forward-looking statements involves risks, uncertainties and assumptions. If any of these risks or uncertainties materialize or if any of the assumptions prove incorrect, our actual results, performance or achievements could be materially different 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 the company's Prospectus filed on April 7th, 2014 and additional information that will be set forth in our Form 10-Q that will be filed for the quarter ended June 30, 2014, which should be read in conjunction with these financial results. These documents are available on the SEC Filings section of the Investor Relations section of our website at http://investors.grubhub.com/. 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 update these forward-looking statements publicly, 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 June 30, 2013 and the unaudited historical statement of operations of GrubHub Holdings (Acquiree) for the three months ended June 30, 2013, adjusted for income taxes at the Company’s historical effective tax rate.

 

Three Months Ended June 30,

 

 

 

 

 

ProForma Combined

 

 

2014

 

 

2013

 

 

(in thousands)

 

Revenues

$

60,006

 

 

$

40,650

 

Costs and expenses:

 

 

 

 

 

 

 

Sales and marketing

 

16,168

 

 

 

10,568

 

Operations and support

 

14,734

 

 

 

10,823

 

Technology (exclusive of amortization)

 

6,066

 

 

 

4,201

 

General and administrative

 

8,620

 

 

 

11,916

 

Depreciation and amortization

 

5,615

 

 

 

2,561

 

Total costs and expenses

 

51,203

 

 

 

40,069

 

Income before provision for income taxes

 

8,803

 

 

 

581

 

Provision for income taxes

 

6,111

 

 

 

320

 

Net income

$

2,692

 

 

$

261

 

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

 

 

 

 

 

 

 

Basic

$

0.03

 

 

$

(0.01

)

Diluted

$

0.03

 

 

$

0.00

 

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

 

 

 

 

 

 

 

Basic

 

78,042

 

 

 

54,692

 

Diluted

 

82,074

 

 

 

74,983

 

KEY PRO FORMA OPERATING METRICS

 

Three Months Ended June 30,

 

 

2014

 

 

2013

Pro Forma

 

Active Diners (000s)

 

4,190

 

 

 

2,780

 

Daily Average Grubs

 

174,500

 

 

 

130,100

 

Gross Food Sales (millions)

$

422.6

 

 

$

306.7

 

 

 

GRUBHUB INC.

 

CONDENSED CONSOLIDATED BALANCE SHEETS - UNAUDITED

 

(in thousands, except share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30, 2014

 

 

 

 

 

 

(Unaudited)

 

 

December 31, 2013

 

ASSETS

 

 

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

 

 

Cash and cash equivalents

$

207,096

 

 

$

86,542

 

Accounts receivable, less allowances for doubtful accounts

 

37,863

 

 

 

29,304

 

Deferred taxes, current

 

3,688

 

 

 

3,688

 

Prepaid expenses

 

2,505

 

 

 

2,625

 

Total current assets

 

251,152

 

 

 

122,159

 

PROPERTY AND EQUIPMENT:

 

 

 

 

 

 

 

Property and equipment, net of depreciation and amortization

 

16,529

 

 

 

17,096

 

OTHER ASSETS:

 

 

 

 

 

 

 

Other assets

 

4,039

 

 

 

2,328

 

Goodwill

 

352,788

 

 

 

352,788

 

Acquired intangible assets, net of amortization

 

261,390

 

 

 

268,441

 

Total other assets

 

618,217

 

 

 

623,557

 

TOTAL ASSETS

$

885,898

 

 

$

762,812

 

LIABILITIES, REDEEMABLE COMMON STOCK AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

 

 

Restaurant food liability

$

84,486

 

 

$

78,245

 

Accounts payable

 

2,390

 

 

 

3,353

 

Accrued payroll

 

3,441

 

 

 

1,720

 

Taxes payable

 

1,377

 

 

 

1,768

 

Restructuring accrual

 

478

 

 

 

176

 

Other accruals

 

9,850

 

 

 

7,329

 

Total current liabilities

 

102,022

 

 

 

92,591

 

LONG TERM LIABILITIES:

 

 

 

 

 

 

 

Deferred taxes, non-current

 

98,633

 

 

 

90,495

 

Other accruals

 

3,939

 

 

 

3,936

 

Total long term liabilities

 

102,572

 

 

 

94,431

 

Commitments and Contingencies

 

 

 

 

 

 

 

Redeemable common stock, $0.0001 par value, no shares and 1,344,236 shares outstanding as of June 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

 

316

 

 

 

132

 

Additional paid-in capital

 

617,375

 

 

 

500,356

 

Retained earnings

 

63,605

 

 

 

56,880

 

Total Stockholders’ Equity

$

681,304

 

 

$

557,375

 

TOTAL LIABILITIES, REDEEMABLE COMMON STOCK AND STOCKHOLDERS’ EQUITY

$

885,898

 

 

$

762,812

 

 

 

GRUBHUB INC.

 

CONDENSED STATEMENTS OF OPERATIONS - UNAUDITED

 

(in thousands, except per share data)

 

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended

June 30,

 

 

2014

 

 

2013

 

 

2014

 

 

2013

 

Revenues

$

60,006

 

 

$

26,857

 

 

$

118,619

 

 

$

52,658

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

16,168

 

 

 

6,064

 

 

 

32,285

 

 

 

16,164

 

Operations and support

 

14,734

 

 

 

5,998

 

 

 

29,841

 

 

 

11,975

 

Technology (exclusive of amortization)

 

6,066

 

 

 

2,697

 

 

 

11,413

 

 

 

5,344

 

General and administrative

 

8,620

 

 

 

5,809

 

 

 

16,944

 

 

 

8,712

 

Depreciation and amortization

 

5,615

 

 

 

1,877

 

 

 

11,130

 

 

 

3,673

 

Total costs and expenses

 

51,203

 

 

 

22,445

 

 

 

101,613

 

 

 

45,868

 

Income before provision for income taxes

 

8,803

 

 

 

4,412

 

 

 

17,006

 

 

 

6,790

 

Provision for income taxes

 

6,111

 

 

 

2,589

 

 

 

9,961

 

 

 

3,711

 

Net income

$

2,692

 

 

$

1,823

 

 

$

7,045

 

 

$

3,079

 

Net income per share attributable to common stockholders:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

$

0.03

 

 

$

0.04

 

 

$

0.10

 

 

$

0.08

 

Diluted

$

0.03

 

 

$

0.04

 

 

$

0.09

 

 

$

0.07

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

78,042

 

 

 

31,373

 

 

 

66,626

 

 

 

31,368

 

Diluted

 

82,074

 

 

 

43,566

 

 

 

79,854

 

 

 

43,356

 

 

GRUBHUB INC.

 

CONDENSED STATEMENTS OF CASH FLOWS - UNAUDITED

 

(in thousands)

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30,

 

 

2014

 

 

2013

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

 

Net income

$

7,045

 

 

$

3,079

 

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

 

 

 

 

 

 

 

Depreciation

 

2,390

 

 

 

1,278

 

Provision for doubtful accounts

 

166

 

 

 

86

 

Deferred taxes

 

8,138

 

 

 

(151

)

Intangible asset amortization

 

8,740

 

 

 

2,395

 

Tenant allowance amortization

 

(79

)

 

 

(79

)

Stock based compensation

 

4,687

 

 

 

1,238

 

Deferred rent

 

76

 

 

 

(64

)

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

 

 

 

 

 

 

 

Accounts receivable

 

(8,725

)

 

 

(7,081

)

Prepaid expenses and other assets

 

(1,592

)

 

 

452

 

Accounts payable

 

(962

)

 

 

1,510

 

Restaurant food liability

 

6,241

 

 

 

11,184

 

Accrued payroll

 

1,721

 

 

 

1,192

 

Other accruals

 

2,439

 

 

 

4,376

 

Net cash provided by operating activities

 

30,285

 

 

 

19,415

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

 

Capitalized website and development costs

 

(1,112

)

 

 

(1,434

)

Purchases of property and equipment

 

(2,378

)

 

 

(3,170

)

Net cash used in investing activities

 

(3,490

)

 

 

(4,604

)

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

 

Net proceeds from the issuance of common stock

 

94,927

 

 

 

 

Proceeds from exercise of stock options

 

1,145

 

 

 

104

 

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

)

 

 

(651

)

Net cash provided by (used in) financing activities

 

93,575

 

 

 

(1,806

)

 

 

 

 

 

 

 

 

Net change in cash and cash equivalents

 

120,370

 

 

 

13,005

 

Effect of exchange rates on cash

 

184

 

 

 

(225

)

Cash and cash equivalents at beginning of year

 

86,542

 

 

 

41,161

 

Cash and cash equivalents at end of the period

$

207,096

 

 

$

53,941

 

 

 

 

 

 

 

 

 

SUPPLEMENTAL DISCLOSURE OF NON CASH ITEMS

 

 

 

 

 

 

 

Cash paid for income taxes

$

1,321

 

 

$

2,243

 


NON-GAAP ADJUSTED EBITDA RECONCILATION – PRO FORMA

 

 

Three Months Ended

June 30,

 

 

Six Months Ended

June 30,

 

 

2014

 

 

2013

Pro Forma

 

 

2014

 

 

2013

Pro Forma

 

 

(in thousands)

 

Net income

$

2,692

 

 

$

261

 

 

$

7,045

 

 

$

920

 

Income taxes

 

6,111

 

 

 

320

 

 

 

9,961

 

 

 

1,125

 

Depreciation and amortization

 

5,615

 

 

 

2,561

 

 

 

11,130

 

 

 

4,975

 

EBITDA

 

14,418

 

 

 

3,142

 

 

 

28,136

 

 

 

7,020

 

Merger and restructuring costs

 

207

 

 

 

6,669

 

 

 

492

 

 

 

7,430

 

Stock-based compensation

 

2,284

 

 

 

1,022

 

 

 

4,687

 

 

 

2,010

 

Adjusted EBITDA

$

16,909

 

 

$

10,833

 

 

$

33,315

 

 

$

16,460

 

SOURCE GrubHub Inc.