Grubhub Reports Record Fourth Quarter And Full Year 2016 Results

Grubhub generates 38% revenue growth in the fourth quarter

CHICAGO, Feb. 8, 2017 /PRNewswire/ — Grubhub Inc. (NYSE: GRUB), the nation’s leading takeout marketplace, today announced financial results for the quarter and year ended Dec. 31, 2016. Orders grew 21% year-over-year, and the Company posted quarterly revenues of $137.5 million, which is a 38% year-over-year increase from $100.0 million in the fourth quarter of 2015.

“Grubhub had a transformative year in 2016. We dramatically improved our product and reaccelerated order growth. Fueled by data-driven product enhancements, substantial strides in delivery, and a refreshed marketing approach, we exited the year growing DAGs faster than we did a year ago,” said Matt Maloney, Grubhub CEO. “With Grubhub delivery now in roughly 70 markets across the country and a significantly improved restaurant network, we enter 2017 well positioned to press our market leading advantage and give Grubhub growth momentum for years to come.”

Fourth Quarter and Full Year 2016 Highlights

The following results reflect the financial performance and key operating metrics of our business for the three months and year ended Dec. 31, 2016, as compared to the same periods in 2015.

Fourth Quarter Financial Highlights

  • Revenues: $137.5 million, a 38% year-over-year increase from $100.0 million in the fourth quarter of 2015.
  • Net Income: $13.6 million, or $0.16 per diluted share, a 21% year-over-year increase from $11.3 million, or $0.13 per diluted share, in the fourth quarter of 2015.
  • Non-GAAP Adjusted EBITDA: $39.2 million, a 46% year-over-year increase from $26.8 million in the fourth quarter of 2015.
  • Non-GAAP Net Income: $19.8 million, or $0.23 per diluted share, a 19% year-over-year increase from $16.7 million, or $0.19 per diluted share, in the fourth quarter of 2015.

Fourth Quarter Key Business Metrics Highlights

  • Active Diners were 8.17 million, a 21% year-over-year increase from 6.75 million Active Diners in the fourth quarter of 2015.
  • Daily Average Grubs were 292,500, a 21% year-over-year increase from 241,800 Daily Average Grubs in the fourth quarter of 2015.
  • Gross Food Sales were $818 million, a 27% year-over-year increase from $643 million in the fourth quarter of 2015.

Full Year Financial Highlights

  • Revenues: $493.3 million, a 36% year-over-year increase from $361.8 million in 2015.
  • Net Income: $49.6 million, or $0.58 per diluted share, a 30% year-over-year increase from $38.1 million, or $0.44 per diluted share, in 2015.
  • Non-GAAP Adjusted EBITDA: $144.6 million, a 38% year-over-year increase from $105.0 million in 2015.
  • Non-GAAP Net Income: $76.6 million, or $0.89 per diluted share, a 32% year-over-year increase from $58.1 million, or $0.68 per diluted share.

Full Year Key Business Metrics Highlights

  • Active Diners were 8.17 million, a 21% year-over-year increase from 6.75 million Active Diners in 2015.
  • Daily Average Grubs were 274,800, a 21% year-over-year increase  from 227,100 Daily Average Grubs in 2015.
  • Gross Food Sales were $3.0 billion, a 27% year-over-year increase from $2.4 billion in 2015.

“Our rapid scaling in delivery combined with our substantial incremental margins helped Grubhub post record profits in 2016. Adjusted EBITDA grew 38% for the year, with Adjusted EBITDA per order growing 14% to $1.44 per order in 2016 from $1.27 the prior year,” said Adam DeWitt, Grubhub CFO. “Throughout 2016 and into this year, we’ve been adding the highest quality restaurants in all of our markets to our vastly improved diner platform. We believe this formula will support us in driving growth across our network, while our scale will help us generate more cash flow per order over time.”

First Quarter and Full Year 2017 Guidance

Based on information available as of Feb. 8, 2017, the Company is providing the following financial guidance for the first quarter and full year of 2017:

First Quarter 2017

Full Year 2017

(in millions)

Expected Revenue range

$148 – $156

$620 – $660

Expected Adjusted EBITDA range

$37 – $42

$165 – $190

 

Fourth Quarter 2017 Financial Results Conference Call
Grubhub will webcast a conference call today at 9 a.m. CT to discuss the fourth quarter 2016 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 Feb. 22, 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 50,000 restaurant partners in over 1,100 U.S. cities and London. The Grubhub portfolio of brands includes Grubhub, Seamless, AllMenus, MenuPages, LAbite, Restaurants on the Run, DiningIn and Delivered Dish.

Use of Forward Looking Statements
This press release contains forward-looking statements regarding management’s future expectations, beliefs, intentions, goals, strategies, plans and prospects, including the expected financial performance of Grubhub following its recent acquisitions and investment in delivery. 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 Annual Report on Form 10-K filed on Feb. 26, 2016 and our most recent Quarterly Report on Form 10-Q for the quarter ended Sept. 30, 2016, 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 Annual Report on Form 10-K that will be filed for the year ended Dec. 31, 2016, 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 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, 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

December 31,

Year Ended

December 31,

2016

2015

2016

2015

Revenues

$

137,457

$

99,959

$

493,331

$

361,825

Costs and expenses:

Sales and marketing

29,636

24,921

110,323

91,150

Operations and support

51,727

32,483

171,756

107,424

Technology (exclusive of amortization)

10,689

8,802

42,454

32,782

General and administrative

12,252

11,457

49,753

40,506

Depreciation and amortization

9,911

6,657

35,193

28,034

Total costs and expenses

114,215

84,320

409,479

299,896

Income before provision for income taxes

23,242

15,639

83,852

61,929

Provision for income taxes

9,605

4,351

34,295

23,852

Net income attributable to common stockholders

$

13,637

$

11,288

$

49,557

$

38,077

Net income per share attributable to common stockholders:

Basic

$

0.16

$

0.13

$

0.58

$

0.45

Diluted

$

0.16

$

0.13

$

0.58

$

0.44

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

Basic

85,608

84,823

85,069

84,076

Diluted

86,666

86,028

86,135

85,706

 

KEY OPERATING METRICS

Three Months Ended

 December 31,

Year Ended

December 31,

2016

2015

2016

2015

Active Diners (000s)

8,174

6,746

8,174

6,746

Daily Average Grubs

292,500

241,800

274,800

227,100

Gross Food Sales (millions)

$

817.7

$

642.5

$

2,998.1

$

2,353.6

 

 

GRUBHUB INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

December 31,

2016

December 31, 

2015

ASSETS

CURRENT ASSETS:

Cash and cash equivalents

$

239,528

$

169,293

Short term investments

84,091

141,448

Accounts receivable, less allowances for doubtful accounts

60,550

42,051

Prepaid expenses

12,168

3,482

Total current assets

396,337

356,274

PROPERTY AND EQUIPMENT:

Property and equipment, net of depreciation and amortization

46,555

19,082

OTHER ASSETS:

Other assets

4,530

3,105

Goodwill

436,455

396,220

Acquired intangible assets, net of amortization

313,630

285,567

Total other assets

754,615

684,892

TOTAL ASSETS

$

1,197,507

$

1,060,248

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES:

Restaurant food liability

$

83,349

$

64,326

Accounts payable

7,590

8,189

Accrued payroll

7,338

4,841

Taxes payable

865

426

Other accruals

11,348

11,830

Total current liabilities

110,490

89,612

LONG TERM LIABILITIES:

Deferred taxes, non-current

108,022

87,584

Other accruals

6,876

5,456

Total long term liabilities

114,898

93,040

STOCKHOLDERS’ EQUITY:

Common stock, $0.0001 par value

9

8

Accumulated other comprehensive loss

(2,078)

(604)

Additional paid-in capital

805,731

759,292

Retained earnings

168,457

118,900

Total Stockholders’ Equity

$

972,119

$

877,596

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$

1,197,507

$

1,060,248

 

GRUBHUB INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

Year Ended December 31,

2016

2015

CASH FLOWS FROM OPERATING ACTIVITIES

Net income

$

49,557

$

38,077

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

Depreciation

8,921

5,085

Provision for doubtful accounts

1,102

850

Deferred taxes

1,027

(3,835)

Amortization of intangible assets

26,272

22,949

Stock-based compensation

23,559

13,450

Deferred rent

1,286

32

Other

(406)

529

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

Accounts receivable

(17,488)

(4,343)

Prepaid expenses and other assets

(8,765)

242

Restaurant food liability

16,451

(29,409)

Accounts payable

(3,204)

3,312

Accrued payroll

1,819

(2,104)

Other accruals

(2,453)

(80)

Net cash provided by operating activities

97,678

44,755

CASH FLOWS FROM INVESTING ACTIVITIES

Purchases of investments

(226,694)

(220,667)

Proceeds from maturity of investments

284,662

189,872

Capitalized website and development costs

(12,809)

(7,137)

Purchases of property and equipment

(24,087)

(4,150)

Acquisitions of businesses, net of cash acquired

(65,849)

(73,907)

Acquisition of other intangible assets

(250)

Other cash flows from investing activities

(492)

(408)

Net cash used in investing activities

(45,519)

(116,397)

CASH FLOWS FROM FINANCING ACTIVITIES

Repurchases of common stock

(14,774)

Proceeds from exercise of stock options

13,468

11,919

Excess tax benefits related to stock-based compensation

24,906

27,830

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

(2,779)

(345)

Payments for debt issuance costs

(1,477)

Net cash provided by financing activities

19,344

39,404

Net change in cash and cash equivalents

71,503

(32,238)

Effect of exchange rates on cash

(1,268)

(265)

Cash and cash equivalents at beginning of year

169,293

201,796

Cash and cash equivalents at end of the period

$

239,528

$

169,293

SUPPLEMENTAL DISCLOSURE OF NON CASH ITEMS

Fair value of common stock issued for acquisitions

$

$

15,980

Cash paid for income taxes

8,722

 

GRUBHUB INC.

NON-GAAP FINANCIAL MEASURES RECONCILIATION

(in thousands, except per share data)

Three Months Ended
December 31,

Year Ended
December 31,

2016

2015

2016

2015

Net income

$

13,637

$

11,288

$

49,557

$

38,077

Income taxes

9,605

4,351

34,295

23,852

Depreciation and amortization

9,911

6,657

35,193

28,034

EBITDA

33,153

22,296

119,045

89,963

Acquisition and restructuring costs

253

468

2,042

1,554

Stock-based compensation

5,804

4,072

23,559

13,450

Adjusted EBITDA

$

39,210

$

26,836

$

144,646

$

104,967

Three Months Ended
December 31,

Year Ended
December 31,

2016

2015

2016

2015

Net income

$

13,637

$

11,288

$

49,557

$

38,077

Stock-based compensation

5,804

4,072

23,559

13,450

Amortization of acquired intangible assets

4,801

4,774

20,871

18,236

Accelerated write-down of Seamless technology platform

1,897

Acquisition and restructuring costs

253

468

2,042

1,554

Income tax adjustments

(4,692)

(3,928)

(19,472)

(15,109)

Non-GAAP net income

$

19,803

$

16,674

$

76,557

$

58,105

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

86,666

86,028

86,135

85,706

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

$

0.23

$

0.19

$

0.89

$

0.68

 

Guidance

Three Months Ended

 March 31, 2017

Year Ended

December 31, 2017

Low

High

Low

High

(in millions)

Net income

$

12.5

$

15.5

$

58.6

$

73.5

Income taxes

8.5

10.5

39.9

50.0

Depreciation and amortization

9.5

9.5

39.0

39.0

EBITDA

30.5

35.5

137.5

162.5

Acquisition and restructuring costs

Stock-based compensation

6.5

6.5

27.5

27.5

Adjusted EBITDA

$

37.0

$

42.0

$

165.0

$

190.0