Press Release Details

Grubhub Reports Record Third Quarter Results

10/25/2018

Grubhub generates 52% revenue growth in the third quarter


CHICAGO, Oct. 25, 2018 – 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 Sept. 30, 2018. The Company posted revenues of $247 million, which is a 52% year-over-year increase from $163 million in the third quarter of 2017. Gross Food Sales grew 40% year-over-year to $1.2 billion, up from $867 million in the year ago period.

 

“We added more organic new diners this quarter than ever before, helping drive the highest organic DAG growth we’ve seen in a year and a half. Better restaurant selection, a more intelligent diner platform, and more strategic marketing continue to bring more high quality diners to Grubhub,” said Matt Maloney, Grubhub’s founder and chief executive officer. “With solid traction in new diner acquisition over multiple quarters and increased coverage across the country from our delivery expansion, we are in prime position to invest incrementally in advertising and accelerate online ordering adoption.”

Third Quarter 2018 Highlights

 

The following results reflect the financial performance and key operating metrics of our business for the three months ended Sept. 30, 2018, as compared to the same period in 2017.

 

Third Quarter Financial Highlights

 

 

Revenues: $247.2 million, a 52% year-over-year increase from $163.1 million in the third quarter of 2017.

 

Net Income: $22.7 million, or $0.24 per diluted share, a 75% year-over-year increase from $13.0 million, or $0.15 per diluted share, in the third quarter of 2017.

 

Non-GAAP Adjusted EBITDA: $60.1 million, a 41% year-over-year increase from $42.7 million in the third quarter of 2017.

 

Non-GAAP Net Income: $42.2 million, or $0.45 per diluted share, a 72% year-over-year increase from $24.5 million, or $0.28 per diluted share, in the third quarter of 2017.

 

Third Quarter Key Business Metrics Highlights (excludes LevelUp impact in 2018)

 

 

Active Diners were 16.4 million, a 67% year-over-year increase from 9.8 million Active Diners in the third quarter of 2017.

 

Daily Average Grubs (DAGs) were 416,000, a 37% year-over-year increase from 304,500 DAGs in the third quarter of 2017.

 

Gross Food Sales were $1.2 billion, a 40% year-over-year increase from $867 million in the third quarter of 2017.

 

"We are excited to invest behind the diner and order momentum of the last several quarters.  We have significant opportunity to accelerate diner growth by broadening delivery coverage areas and increasing marketing spend," said Adam DeWitt, Grubhub’s president and chief financial officer. "As a result, we are opportunistically investing an incremental $20–$30 million in marketing and delivery expansion in the fourth quarter, taking our total 2018 investment in growth to


 

substantially more than $200 million.  The 200 total delivery markets we will launch in 2018 plus accelerated diner growth put us in a great position to capture takeout orders as they move online."

 

Fourth Quarter 2018 Guidance

 

Based on information available as of Oct. 25, 2018, the Company is providing the following financial guidance for the fourth quarter of 2018. This guidance excludes any impact from the potential acquisitions of Tapingo and certain assets of OrderUp, which have not yet closed and are subject to standard closing conditions:

 

 

Fourth Quarter 2018

 

(in millions)

Expected Revenue range

$283 - $293

Expected Adjusted EBITDA range

$40 - $50

 

 

Third Quarter 2018 Financial Results Conference Call 

Grubhub will webcast a conference call today at 9 a.m. CT to discuss the third quarter 2018 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.

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 95,000 restaurant partners in over 1,700 U.S. cities and London. The Grubhub portfolio of brands includes Grubhub, Seamless, LevelUp, Eat24, 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 following the acquisitions of Eat24 and LevelUp and its commercial agreements with Yelp and Yum! Brands. 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, 2018, which is on file with the SEC and is 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, 2018, 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, interest income and 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 “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.

 

Contacts:

Dave Zaragoza

Corporate Finance & Investor Relations

ir@grubhub.com

 

Katie Norris

Press

press@grubhub.com

 


 

 

GRUBHUB INC.

STATEMENTS OF OPERATIONS

(in thousands, except per share data)

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Revenues

$

247,225

 

 

$

163,059

 

 

$

719,536

 

 

$

477,987

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operations and support

 

111,511

 

 

 

65,352

 

 

 

310,239

 

 

 

187,795

 

Sales and marketing

 

49,426

 

 

 

35,138

 

 

 

144,413

 

 

 

105,346

 

Technology (exclusive of amortization)

 

21,258

 

 

 

14,292

 

 

 

57,306

 

 

 

41,560

 

General and administrative

 

22,195

 

 

 

18,617

 

 

 

58,072

 

 

 

46,627

 

Depreciation and amortization

 

20,987

 

 

 

12,613

 

 

 

61,787

 

 

 

33,067

 

Total costs and expenses

 

225,377

 

 

 

146,012

 

 

 

631,817

 

 

 

414,395

 

Income from operations

 

21,848

 

 

 

17,047

 

 

 

87,719

 

 

 

63,592

 

Interest (income) expense - net

 

337

 

 

 

(373

)

 

 

1,367

 

 

 

(908

)

Income before provision for income taxes

 

21,511

 

 

 

17,420

 

 

 

86,352

 

 

 

64,500

 

Income tax (benefit) expense

 

(1,234

)

 

 

4,432

 

 

 

2,721

 

 

 

19,043

 

Net income attributable to common stockholders

$

22,745

 

 

$

12,988

 

 

$

83,631

 

 

$

45,457

 

Net income per share attributable to common stockholders:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

$

0.25

 

 

$

0.15

 

 

$

0.94

 

 

$

0.53

 

Diluted

$

0.24

 

 

$

0.15

 

 

$

0.91

 

 

$

0.52

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

90,494

 

 

 

86,449

 

 

 

89,027

 

 

 

86,162

 

Diluted

 

93,678

 

 

 

88,543

 

 

 

92,091

 

 

 

87,788

 

 

KEY OPERATING METRICS

 

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

 

2018(a)

 

 

2017

 

 

2018(a)

 

 

2017

 

Active Diners (000s)

 

 

 

16,379

 

 

 

9,806

 

 

 

16,379

 

 

 

9,806

 

Daily Average Grubs

 

 

 

416,000

 

 

 

304,500

 

 

 

425,300

 

 

 

314,200

 

Gross Food Sales (millions)

 

 

$

1,214.5

 

 

$

867.3

 

 

$

3,679.9

 

 

$

2,645.1

 

(a)Excludes the impact of the LevelUp acquisition, which closed on September 13, 2018.

 


 

GRUBHUB INC.

 

CONSOLIDATED BALANCE SHEETS

 

(in thousands, except share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 2018

 

 

December 31, 2017

 

ASSETS

 

 

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

 

 

Cash and cash equivalents

$

294,550

 

 

$

234,090

 

Short-term investments

 

16,687

 

 

 

23,605

 

Accounts receivable, less allowances for doubtful accounts

 

120,306

 

 

 

87,377

 

Income tax receivable

 

14,125

 

 

 

8,593

 

Prepaid expenses and other current assets

 

17,024

 

 

 

6,818

 

Total current assets

 

462,692

 

 

 

360,483

 

PROPERTY AND EQUIPMENT:

 

 

 

 

 

 

 

Property and equipment, net of depreciation and amortization

 

105,434

 

 

 

71,384

 

OTHER ASSETS:

 

 

 

 

 

 

 

Other assets

 

11,666

 

 

 

6,487

 

Goodwill

 

885,350

 

 

 

589,862

 

Acquired intangible assets, net of amortization

 

520,867

 

 

 

515,553

 

Total other assets

 

1,417,883

 

 

 

1,111,902

 

TOTAL ASSETS

$

1,986,009

 

 

$

1,543,769

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

 

 

Restaurant food liability

$

122,900

 

 

$

119,922

 

Accounts payable

 

17,184

 

 

 

7,607

 

Accrued payroll

 

19,036

 

 

 

13,186

 

Taxes payable

 

1,566

 

 

 

3,109

 

Short-term debt

 

6,250

 

 

 

3,906

 

Other accruals

 

33,186

 

 

 

26,818

 

Total current liabilities

 

200,122

 

 

 

174,548

 

LONG-TERM LIABILITIES:

 

 

 

 

 

 

 

Deferred taxes, non-current

 

44,073

 

 

 

74,292

 

Other accruals

 

19,683

 

 

 

7,468

 

Long-term debt

 

290,073

 

 

 

169,645

 

Total long-term liabilities

 

353,829

 

 

 

251,405

 

STOCKHOLDERS’ EQUITY:

 

 

 

 

 

 

 

Common stock, $0.0001 par value

 

9

 

 

 

9

 

Accumulated other comprehensive loss

 

(1,620

)

 

 

(1,228

)

Additional paid-in capital

 

1,079,165

 

 

 

849,043

 

Retained earnings

 

354,504

 

 

 

269,992

 

Total Stockholders’ Equity

$

1,432,058

 

 

$

1,117,816

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$

1,986,009

 

 

$

1,543,769

 

 


 

GRUBHUB INC.

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30,

 

 

 

2018

 

 

2017

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

 

 

Net income

 

$

83,631

 

 

$

45,457

 

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

 

 

 

 

 

 

 

 

Depreciation

 

 

16,189

 

 

 

7,949

 

Provision for doubtful accounts

 

 

741

 

 

 

338

 

Deferred taxes

 

 

2,048

 

 

 

(2,162

)

Amortization of intangible assets

 

 

45,598

 

 

 

25,118

 

Stock-based compensation

 

 

36,445

 

 

 

23,913

 

Deferred rent

 

 

3,975

 

 

 

130

 

Amortization of deferred loan costs

 

 

588

 

 

 

349

 

Other

 

 

(732

)

 

 

(823

)

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

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(17,969

)

 

 

(15,903

)

Income taxes receivable

 

 

(5,533

)

 

 

3,795

 

Prepaid expenses and other assets

 

 

(15,455

)

 

 

4,193

 

Restaurant food liability

 

 

1,608

 

 

 

4,591

 

Accounts payable

 

 

5,265

 

 

 

2,965

 

Accrued payroll

 

 

5,311

 

 

 

1,575

 

Other accruals

 

 

3,752

 

 

 

6,351

 

Net cash provided by operating activities

 

 

165,462

 

 

 

107,836

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

 

 

Acquisitions of businesses, net of cash acquired

 

 

(366,856

)

 

 

(51,859

)

Purchases of investments

 

 

(47,642

)

 

 

(145,667

)

Proceeds from maturity of investments

 

 

54,916

 

 

 

164,733

 

Capitalized website and development costs

 

 

(21,471

)

 

 

(15,281

)

Purchases of property and equipment

 

 

(31,984

)

 

 

(12,549

)

Acquisition of other intangible assets

 

 

 

 

 

(25,147

)

Other cash flows from investing activities

 

 

38

 

 

 

589

 

Net cash used in investing activities

 

 

(412,999

)

 

 

(85,181

)

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

Proceeds from the issuance of common stock

 

 

200,000

 

 

 

 

Proceeds from borrowings under the Credit Agreement

 

 

175,000

 

 

 

 

Repayments of borrowings under the Credit Agreement

 

 

(52,344

)

 

 

 

Proceeds from exercise of stock options

 

 

13,010

 

 

 

12,505

 

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

 

 

(28,238

)

 

 

(7,696

)

Payment for debt issuance costs

 

 

 

 

 

(285

)

Net cash provided by financing activities

 

 

307,428

 

 

 

4,524

 

Net change in cash, cash equivalents, and restricted cash

 

 

59,891

 

 

 

27,179

 

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

 

 

(406

)

 

 

709

 

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

 

 

238,239

 

 

 

242,214

 

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

 

$

297,724

 

 

$

270,102

 

SUPPLEMENTAL DISCLOSURE OF NON-CASH ITEMS

 

 

 

 

 

 

 

 

Cash paid for income taxes

 

$

7,508

 

 

$

16,340

 

 


 

GRUBHUB INC.

NON-GAAP FINANCIAL MEASURES RECONCILIATION

(in thousands, except per share data)

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Net income

$

22,745

 

 

$

12,988

 

 

$

83,631

 

 

$

45,457

 

Income taxes

 

(1,234

)

 

 

4,432

 

 

 

2,721

 

 

 

19,043

 

Interest (income) expense - net

 

337

 

 

 

(373

)

 

 

1,367

 

 

 

(908

)

Depreciation and amortization

 

20,987

 

 

 

12,613

 

 

 

61,787

 

 

 

33,067

 

EBITDA

 

42,835

 

 

 

29,660

 

 

 

149,506

 

 

 

96,659

 

Acquisition, restructuring and legal costs

 

3,024

 

 

 

4,539

 

 

 

5,665

 

 

 

6,443

 

Stock-based compensation

 

14,275

 

 

 

8,475

 

 

 

36,445

 

 

 

23,913

 

Adjusted EBITDA

$

60,134

 

 

$

42,674

 

 

$

191,616

 

 

$

127,015

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Net income

$

22,745

 

 

$

12,988

 

 

$

83,631

 

 

$

45,457

 

Stock-based compensation

 

14,275

 

 

 

8,475

 

 

 

36,445

 

 

 

23,913

 

Amortization of acquired intangible assets

 

10,037

 

 

 

6,455

 

 

 

31,107

 

 

 

16,828

 

Acquisition, restructuring and legal costs

 

3,024

 

 

 

4,539

 

 

 

5,665

 

 

 

6,443

 

Income tax adjustments

 

(7,854

)

 

 

(7,936

)

 

 

(21,160

)

 

 

(19,770

)

Non-GAAP net income

$

42,227

 

 

$

24,521

 

 

$

135,688

 

 

$

72,871

 

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

 

93,678

 

 

 

88,543

 

 

 

92,091

 

 

 

87,788

 

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

$

0.45

 

 

$

0.28

 

 

$

1.47

 

 

$

0.83

 

 

 

Guidance

 

 

Three Months Ended

December 31, 2018

 

 

Low

 

 

High

 

 

(in millions)

 

Net income

$

1.4

 

 

$

8.5

 

Income taxes

 

0.6

 

 

 

3.5

 

Interest expense ̶ net

 

2.0

 

 

 

2.0

 

Depreciation and amortization

 

22.0

 

 

 

22.0

 

EBITDA

 

26.0

 

 

 

36.0

 

Acquisition and restructuring costs

 

 

 

 

 

Stock-based compensation

 

14.0

 

 

 

14.0

 

Adjusted EBITDA

$

40.0

 

 

$

50.0