Grubhub Reports Record Third Quarter Results

Grubhub generates 44% revenue growth in the third quarter

CHICAGO, Oct. 26, 2016 /PRNewswire/ — Grubhub Inc. (NYSE: GRUB), the nation’s leading takeout marketplace, today announced financial results for the quarter ended Sept. 30, 2016. Order growth accelerated to 26% year-over-year, and the Company posted quarterly revenues of $123.5 million, which is a 44% year-over-year increase from $85.7 million in the third quarter of 2015.

“We are pleased with Grubhub’s third quarter growth, as we continue building the most comprehensive marketplace for restaurants and takeout diners. Our product improvements and investment in delivery continue to generate high levels of sustainable growth,” said Matt Maloney, Grubhub CEO. “Grubhub is now delivering for restaurant partners in over 60 markets nationwide, and our growth rate is generally highest in markets where a substantial percentage of orders are being delivered by our drivers.”

Third Quarter 2016 Highlights

The following results reflect the financial performance and key operating metrics of our business for the three months ended Sept. 30, 2016, as compared to the same period in 2015.

Third Quarter Financial Highlights

  • Revenues: $123.5 million, a 44% year-over-year increase from $85.7 million in the third quarter of 2015.
  • Net Income: $13.2 million, or $0.15 per diluted share, a 92% year-over-year increase from $6.9 million, or $0.08 per diluted share, in the third quarter of 2015.
  • Non-GAAP Adjusted EBITDA: $35.5 million, a 65% year-over-year increase from $21.5 million in the third quarter of 2015.
  • Non-GAAP Net Income: $19.9 million, or $0.23 per diluted share, a 73% year-over-year increase from $11.5 million, or $0.13 per diluted share.

Third Quarter Key Business Metrics Highlights

  • Active Diners were 7.69 million, a 19% year-over-year increase from 6.43 million Active Diners in the third quarter of 2015.
  • Daily Average Grubs were 267,500, a 26% year-over-year increase from 211,500 Daily Average Grubs in the third quarter of 2015.
  • Gross Food Sales were $735 million, a 33% year-over-year increase from $554 million in the third quarter of 2015.

“Grubhub had strong topline and bottom line results in the third quarter, generating record net revenues and significant operating leverage,” said Adam DeWitt, Grubhub CFO. “This strong growth, combined with the high incremental margins of our business model, drove adjusted EBITDA per order to $1.44, a 31% increase compared to the third quarter of 2015.”

Fourth Quarter Guidance

Based on information available as of Oct. 26, 2016, the Company is providing the following financial guidance for the fourth quarter of 2016:

Fourth Quarter 2016

(in millions)

Expected Revenue range

$136 – $138

Expected Adjusted EBITDA range

$38 – $40

 

Third Quarter 2016 Financial Results Conference Call: Grubhub will webcast a conference call today at 9 a.m. CDT to discuss the third 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 Nov. 9, 2016.

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 45,000 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 our 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, 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 Quarterly Report on Form 10-Q that will be filed for the quarter ended Sept. 30, 2016, which should be read in conjunction with these financial results. 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 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

September 30,

Nine Months Ended
September 30,

2016

2015

2016

2015

Revenues

$

123,461

$

85,662

$

355,874

$

261,866

Costs and expenses:

Sales and marketing

26,499

21,443

80,687

66,229

Operations and support

44,346

27,637

120,029

74,941

Technology (exclusive of amortization)

11,006

8,412

31,765

23,980

General and administrative

11,754

10,203

37,501

29,049

Depreciation and amortization

9,089

6,299

25,282

21,377

Total costs and expenses

102,694

73,994

295,264

215,576

Income before provision for income taxes

20,767

11,668

60,610

46,290

Provision for income taxes

7,585

4,801

24,690

19,501

Net income attributable to common stockholders

$

13,182

$

6,867

$

35,920

$

26,789

Net income per share attributable to common stockholders:

Basic

$

0.15

$

0.08

$

0.42

$

0.32

Diluted

$

0.15

$

0.08

$

0.42

$

0.31

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

Basic

85,217

84,583

84,889

83,827

Diluted

86,424

85,867

85,957

85,599

 

KEY OPERATING METRICS

Three Months Ended
September 30,

Nine Months Ended
September 30,

2016

2015

2016

2015

Active Diners (000s)

7,685

6,431

7,685

6,431

Daily Average Grubs

267,500

211,500

268,800

222,000

Gross Food Sales (millions)

$

735.0

$

553.6

$

2,180.4

$

1,711.1

 

GRUBHUB INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

September 30,
2016

December 31,

 2015

ASSETS

CURRENT ASSETS:

Cash and cash equivalents

$

177,838

$

169,293

Short term investments

118,743

141,448

Accounts receivable, less allowances for doubtful accounts

65,729

42,051

Prepaid expenses

6,264

3,482

Total current assets

368,574

356,274

PROPERTY AND EQUIPMENT:

Property and equipment, net of depreciation and amortization

43,398

19,082

OTHER ASSETS:

Other assets

4,873

3,105

Goodwill

437,009

396,220

Acquired intangible assets, net of amortization

318,431

285,567

Total other assets

760,313

684,892

TOTAL ASSETS

$

1,172,285

$

1,060,248

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES:

Restaurant food liability

$

78,321

$

64,326

Accounts payable

9,532

8,189

Accrued payroll

6,103

4,841

Taxes payable

785

426

Other accruals

16,054

11,830

Total current liabilities

110,795

89,612

LONG TERM LIABILITIES:

Deferred taxes, non-current

105,642

87,584

Other accruals

6,245

5,456

Total long term liabilities

111,887

93,040

STOCKHOLDERS’ EQUITY:

Common stock, $0.0001 par value

9

8

Accumulated other comprehensive loss

(1,641)

(604)

Additional paid-in capital

796,414

759,292

Retained earnings

154,821

118,900

Total Stockholders’ Equity

$

949,603

$

877,596

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$

1,172,285

$

1,060,248

 

GRUBHUB INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

Nine Months Ended
September 30,

2016

2015

CASH FLOWS FROM OPERATING ACTIVITIES

Net income

$

35,920

$

26,789

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

Depreciation

5,567

3,846

Provision for doubtful accounts

719

565

Deferred taxes

(1,908)

(2,793)

Amortization of intangible assets

19,715

17,531

Stock-based compensation

17,755

9,378

Deferred rent

980

(73)

Other

(292)

553

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

Accounts receivable

(22,299)

(6,912)

Prepaid expenses and other assets

(2,874)

(1,456)

Restaurant food liability

11,361

(31,444)

Accounts payable

(4,592)

(633)

Accrued payroll

582

(2,150)

Other accruals

1,799

389

Net cash provided by operating activities

62,433

13,590

CASH FLOWS FROM INVESTING ACTIVITIES

Purchases of investments

(187,456)

(154,268)

Proceeds from maturity of investments

210,567

122,856

Capitalized website and development costs

(8,859)

(4,961)

Purchases of property and equipment

(17,083)

(2,866)

Acquisitions of businesses, net of cash acquired

(65,849)

(55,687)

Acquisition of other intangible assets

(250)

Other cash flows from investing activities

(540)

Net cash used in investing activities

(69,470)

(94,926)

CASH FLOWS FROM FINANCING ACTIVITIES

Repurchases of common stock

(14,774)

Proceeds from exercise of stock options

11,814

10,689

Excess tax benefits related to stock-based compensation

22,114

21,987

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

(1,205)

Payments for debt issuance costs

(1,477)

Net cash provided by financing activities

16,472

32,676

Net change in cash and cash equivalents

9,435

(48,660)

Effect of exchange rates on cash

(890)

(108)

Cash and cash equivalents at beginning of year

169,293

201,796

Cash and cash equivalents at end of the period

$

177,838

$

153,028

SUPPLEMENTAL DISCLOSURE OF NON CASH ITEMS

Fair value of common stock issued for acquisitions

$

$

15,980

Cash paid for income taxes

5,757

 

NON-GAAP FINANCIAL MEASURES RECONCILIATION

(in thousands, except per share data)

Three Months Ended
September 30,

Nine Months Ended
September 30,

2016

2015

2016

2015

Net income

$

13,182

$

6,867

$

35,920

$

26,789

Income taxes

7,585

4,801

24,690

19,501

Depreciation and amortization

9,089

6,299

25,282

21,377

EBITDA

29,856

17,967

85,892

67,667

Acquisition and restructuring costs

261

383

1,789

1,086

Stock-based compensation

5,349

3,113

17,755

9,378

Adjusted EBITDA

$

35,466

$

21,463

$

105,436

$

78,131

Three Months Ended
September 30,

Nine Months Ended
September 30,

2016

2015

2016

2015

Net income

$

13,182

$

6,867

$

35,920

$

26,789

Stock-based compensation

5,349

3,113

17,755

9,378

Amortization of acquired intangible assets

5,385

4,674

16,070

13,462

Accelerated write-down of Seamless technology platform

1,897

Acquisition and restructuring costs

261

383

1,789

1,086

Income tax adjustments

(4,243)

(3,538)

(14,780)

(11,181)

Non-GAAP net income

$

19,934

$

11,499

$

56,754

$

41,431

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

86,424

85,867

85,957

85,599

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

$

0.23

$

0.13

$

0.66

$

0.48

 

Guidance

Three Months Ended
December 31, 2016

Low

High

(in millions)

Net income

$

14

$

15

Income taxes

9

10

Depreciation and amortization

9

9

EBITDA

32

34

Acquisition and restructuring costs

Stock-based compensation

6

6

Adjusted EBITDA

$

38

$

40

 

Grubhub logo.

 

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SOURCE Grubhub Inc.

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