GRUB
$68.59
Grubhub
($1.16)
(1.66%)
Earnings Details
4th Quarter December 2018
Thursday, February 7, 2019 9:00:00 AM
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Summary

Grubhub Misses

Grubhub (GRUB) reported 4th Quarter December 2018 earnings of $0.16 per share on revenue of $287.7 million. The consensus earnings estimate was $0.28 per share on revenue of $288.9 million. The Earnings Whisper number was $0.31 per share. Revenue grew 40.3% on a year-over-year basis.

The company said it expects first quarter revenue of $310.0 million to $330.0 million and 2019 revenue of $1.315 billion to $1.415 billion. The current consensus estimate is revenue of $318.8 million for the quarter ending March 31, 2019 and revenue of $1.33 billion for the year ending December 31, 2019.

GrubHub Inc provides an online and mobile platform for restaurant pick-up and delivery orders.

Results
Reported Earnings
$0.16
Earnings Whisper
$0.31
Consensus Estimate
$0.28
Reported Revenue
$287.7 Mil
Revenue Estimate
$288.9 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Grubhub Reports Record Fourth Quarter And Full Year 2018 Results

CHICAGO, Feb. 7, 2019 /PRNewswire/ -- Grubhub Inc. (NYSE: GRUB), the nation's leading online and mobile food-ordering and delivery marketplace, today announced financial results for the fourth quarter ended Dec. 31, 2018. The Company posted revenues of $288 million, which is a 40% year-over-year increase from $205 million in the fourth quarter of 2017. Gross Food Sales grew 21% year-over-year to $1.4 billion, up from $1.1 billion in the same period last year.

"2018 was a transformational year for Grubhub. We made great progress connecting hungry takeout diners with the restaurants they want, further positioning ourselves to continue to capture a significant share of the more than $200 billion takeout industry in the U.S.," said Matt Maloney, Grubhub's founder and chief executive officer. "We deepened relationships with our restaurant partners through acquisitions of LevelUp and Tapingo, increased the number of restaurants that partner with us to more than 105,000, grew active diners on our platform by 3.2 million, and – most emblematic of the year – accelerated organic DAG growth on our marketplace every single quarter. We couldn't be more excited about building on this momentum in 2019."

Fourth Quarter and Full Year 2018 Highlights
The following results reflect the financial performance and key operating metrics of our business for the three and twelve months ended Dec. 31, 2018, as compared to the same periods in 2017.

Fourth Quarter Financial Highlights

  • Revenues: $287.7 million, a 40% year-over-year increase from $205.1 million in the fourth quarter of 2017.
  • Net Income (Loss): $(5.2) million, or $(0.06) per diluted share, an 110% year-over-year decrease from $53.5 million, or $0.60 per diluted share, in the fourth quarter of 2017.
  • Non-GAAP Adjusted EBITDA: $42.1 million, a 26% year-over-year decrease from $57.0 million in the fourth quarter of 2017.
  • Non-GAAP Net Income: $17.6 million, or $0.19 per diluted share, a 47% year-over-year decrease from $33.3 million, or $0.37 per diluted share, in the fourth quarter of 2017.

Fourth Quarter Key Business Metrics Highlights1

  • Active Diners were 17.7 million, a 22% year-over-year increase from 14.5 million Active Diners in the fourth quarter of 2017.
  • Daily Average Grubs (DAGs) were 467,500, a 19% year-over-year increase from 392,500 DAGs in the fourth quarter of 2017.
  • Gross Food Sales were $1.4 billion, a 21% year-over-year increase from $1.1 billion in the fourth quarter of 2017.

Full Year Financial Highlights

  • Revenues: $1.0 billion, a 47% year-over-year increase from $683.1 million in 2017.
  • Net Income: $78.5 million, or $0.85 per diluted share, a 21% year-over-year decrease from $99.0 million, or $1.12 per diluted share, in 2017.
  • Non-GAAP Adjusted EBITDA: $233.7 million, a 27% year-over-year increase from $184.0 million in 2017.
  • Non-GAAP Net Income: $153.3 million, or $1.66 per diluted share, a 44% year-over-year increase from $106.1 million, or $1.20 per diluted share, in 2017.

Full Year Key Business Metrics Highlights1

  • Active Diners were 17.7 million, a 22% year-over-year increase from 14.5 million Active Diners in 2017.
  • Daily Average Grubs (DAGs) were 435,900, a 31% year-over-year increase from 334,000 DAGs in 2017.
  • Gross Food Sales were $5.1 billion, a 34% year-over-year increase from $3.8 billion in 2017.

________________________
1 Key Business Metrics are defined in the table below. 

"In the fourth quarter, we announced meaningful incremental investments in marketing and the launch of new Grubhub Delivery markets. Both investments yielded great results, contributing to record active diners during the quarter and accelerated DAG growth, with exceptionally strong growth in our newer markets," said Adam DeWitt, Grubhub's president and chief financial officer. "These strategic investments have laid the ideal foundation for long-term profitable growth. We also expect them to help us generate meaningful operating leverage throughout 2019, with per order economics likely similar to the third quarter of 2018 as we exit this year."

First Quarter and Full Year 2019 Guidance
Based on information available as of Feb. 7, 2019, the Company is providing the following financial guidance for the first quarter and full year of 2019.


First Quarter 2019


Full Year 2019


(in millions)

Expected Revenue range

$310 - $330


$1,315 - $1,415

Expected Adjusted EBITDA range

$40 - $50


$235 - $265

Fourth Quarter and Full Year 2018 Financial Results Conference Call
Grubhub will webcast a conference call today at 9 a.m. CT to discuss the fourth quarter 2018 financial results. The webcast can be accessed on the Grubhub Investor Relations website at https://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 105,000 restaurant partners in over 2,000 U.S. cities and London. The Grubhub portfolio of brands includes Grubhub, Seamless, LevelUp, Tapingo, 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 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 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 and our most recent Quarterly Report on Form 10-Q for the quarter ended Sep. 30, 2018, which are on file with the SEC and are available on the Investor Relations section of our website at https://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 December 31, 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, 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, the impact of the U.S. Tax Cuts and Jobs Act ("U.S. Tax Act") 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.

GRUBHUB INC.

STATEMENTS OF OPERATIONS

(in thousands, except per share data)



Three Months Ended

December 31,



Year Ended

December 31,



2018



2017



2018



2017


Revenues

$

287,721



$

205,080



$

1,007,257



$

683,067


Costs and expenses:
















Operations and support


144,082




81,658




454,321




269,453


Sales and marketing


69,877




45,384




214,290




150,730


Technology (exclusive of amortization)


24,972




14,703




82,278




56,263


General and administrative


27,393




18,396




85,465




65,023


Depreciation and amortization


24,153




18,781




85,940




51,848


Total costs and expenses


290,477




178,922




922,294




593,317


Income (loss) from operations


(2,756)




26,158




84,963




89,750


Interest expense - net


2,163




1,010




3,530




102


Income (loss) before provision for income taxes


(4,919)




25,148




81,433




89,648


Income tax (benefit) expense


231




(28,378)




2,952




(9,335)


Net income (loss) attributable to common stockholders

$

(5,150)



$

53,526



$

78,481



$

98,983


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
















Basic

$

(0.06)



$

0.62



$

0.88



$

1.15


Diluted

$

(0.06)



$

0.60



$

0.85



$

1.12


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
















Basic


90,705




86,702




89,447




86,297


Diluted


93,144




89,366




92,354




88,182


 

KEY BUSINESS METRICS




Three Months Ended

December 31,



Year Ended

December 31,




2018



2017



2018



2017


Active Diners (000s)



17,688




14,462




17,688




14,462


Daily Average Grubs



467,500




392,500




435,900




334,000


Gross Food Sales (millions)


$

1,376.9



$

1,138.6



$

5,056.8



$

3,783.7


Key business metrics include transactions placed on the Grubhub takeout marketplace or a related platform where the Company provides marketing services to generate orders (collectively, the "Platform"). The Platform excludes transactions where the Company exclusively provides technology or fulfillment services.

Active Diners. The number of unique diner accounts from which an order has been placed in the past twelve months through the Company's Platform.

Daily Average Grubs. The number of orders placed on the Platform divided by the number of days for a given period.

Gross Food Sales. The total value of food, beverages, taxes, prepaid gratuities, and any delivery fees processed through the Company's Platform.  The Company includes all revenue generating orders placed on its Platform in this metric; however, revenues are recognized on a net basis for the Company's commissions from the transaction, which are a percentage of the total Gross Food Sales for such transaction.

GRUBHUB INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)










December 31, 2018



December 31, 2017


ASSETS








CURRENT ASSETS:








Cash and cash equivalents

$

211,245



$

234,090


Short-term investments


14,084




23,605


Accounts receivable, less allowances for doubtful accounts


110,855




87,377


Income tax receivable


9,949




8,593


Prepaid expenses and other current assets


17,642




6,818


Total current assets


363,775




360,483


PROPERTY AND EQUIPMENT:








Property and equipment, net of depreciation and amortization


119,495




71,384


OTHER ASSETS:








Other assets


14,186




6,487


Goodwill


1,019,239




589,862


Acquired intangible assets, net of amortization


549,013




515,553


Total other assets


1,582,438




1,111,902


TOTAL ASSETS

$

2,065,708



$

1,543,769


LIABILITIES AND STOCKHOLDERS' EQUITY








CURRENT LIABILITIES:








Restaurant food liability

$

127,344



$

119,922


Accounts payable


26,656




7,607


Accrued payroll


18,173




13,186


Taxes payable


422




3,109


Short-term debt


6,250




3,906


Other accruals


44,323




26,818


Total current liabilities


223,168




174,548


LONG-TERM LIABILITIES:








Deferred taxes, non-current


46,383




74,292


Other accruals


18,270




7,468


Long-term debt


335,548




169,645


Total long-term liabilities


400,201




251,405


STOCKHOLDERS' EQUITY:








Common stock, $0.0001 par value


9




9


Accumulated other comprehensive loss


(1,891)




(1,228)


Additional paid-in capital


1,094,866




849,043


Retained earnings


349,355




269,992


Total Stockholders' Equity

$

1,442,339



$

1,117,816


TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

2,065,708



$

1,543,769


 

GRUBHUB INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)












Year Ended December 31,




2018



2017


CASH FLOWS FROM OPERATING ACTIVITIES









Net income


$

78,481



$

98,983


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









Depreciation



21,647




11,775


Provision for doubtful accounts



941




1,424


Deferred taxes



1,724




(31,179)


Amortization of intangible assets



64,293




40,073


Stock-based compensation



55,261




32,748


Deferred rent



4,974




849


Tenant allowance amortization



(837)




(135)


Amortization of deferred loan costs



715




487


Other



(241)




(168)


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









Accounts receivable



(6,092)




(26,236)


Income taxes receivable



(1,356)




(1,597)


Prepaid expenses and other assets



(16,270)




5,516


Restaurant food liability



2,921




8,576


Accounts payable



11,160




(4,244)


Accrued payroll



3,621




5,537


Other accruals



4,585




11,735


Net cash provided by operating activities



225,527




154,144


CASH FLOWS FROM INVESTING ACTIVITIES









Acquisitions of businesses, net of cash acquired



(517,909)




(333,301)


Purchases of investments



(57,197)




(154,758)


Proceeds from maturity of investments



67,166




215,983


Capitalized website and development costs



(31,180)




(21,325)


Purchases of property and equipment



(43,033)




(18,971)


Acquisition of other intangible assets



(11,851)




(25,147)


Other cash flows from investing activities






557


Net cash used in investing activities



(594,004)




(336,962)


CASH FLOWS FROM FINANCING ACTIVITIES









Proceeds from the issuance of common stock



200,000





Proceeds from borrowings under the Credit Agreement



222,000




200,000


Repayments of borrowings under the Credit Agreement



(53,906)




(25,781)


Proceeds from exercise of stock options



14,190




16,375


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



(35,599)




(10,556)


Payment for debt issuance costs






(1,979)


Net cash provided by financing activities



346,685




178,059


Net change in cash, cash equivalents, and restricted cash



(21,792)




(4,759)


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



(645)




784


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


$

215,802



$

238,239


SUPPLEMENTAL DISCLOSURE OF NON-CASH ITEMS









Cash paid for income taxes


$

7,895



$

19,148


 

GRUBHUB INC.

NON-GAAP FINANCIAL MEASURES RECONCILIATION

(in thousands, except per share data)










Three Months Ended

December 31,



Year Ended
December 31,




2018



2017



2018




2017


Net income (loss)


$

(5,150)



$

53,526



$

78,481



$

98,983


Income taxes



231




(28,378)




2,952




(9,335)


Interest expense - net



2,163




1,010




3,530




102


Depreciation and amortization



24,153




18,781




85,940




51,848


EBITDA



21,397




44,939




170,903




141,598


Acquisition, restructuring and legal costs



1,913




3,199




7,578




9,642


Stock-based compensation



18,816

2



8,835




55,261

2



32,748


Adjusted EBITDA


$

42,126



$

56,973



$

233,742



$

183,988





















Three Months Ended
December 31,



Year Ended
December 31,




2018



2017



2018



2017


Net income (loss)


$

(5,150)



$

53,526



$

78,481



$

98,983


Stock-based compensation



18,816

2 



8,835




55,261

2 



32,748


Amortization of acquired intangible assets



11,377




11,238




42,484




28,066


Acquisition, restructuring and legal costs



1,913




3,199




7,578




9,642


Income tax benefit of the U.S. Tax Act






(34,054)







(34,054)


Income tax adjustments



(9,384)




(9,469)




(30,544)




(29,239)


Non-GAAP net income


$

17,572



$

33,275



$

153,260



$

106,146


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



93,144




89,366




92,354




88,182


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


$

0.19



$

0.37



$

1.66



$

1.20





Guidance




Three Months Ended
March 31, 2019



Year Ended
December 31, 2019




Low



High



Low



High




(in millions)


Net income (loss)


$

(3.4)



$

3.7



$

31.0



$

52.3


Income taxes



(1.4)




1.5




12.6




21.3


Interest expense - net



2.8




2.8




11.4




11.4


Depreciation and amortization



25.0




25.0




106.0




106.0


EBITDA



23.0




33.0




161.0




191.0


Acquisition and restructuring costs













Stock-based compensation



17.0




17.0




74.0




74.0


Adjusted EBITDA


$

40.0



$

50.0



$

235.0



$

265.0


___________________________
2 Stock-based compensation for the three and twelve months ended December 31, 2018 included $4.8 million of expense related to the accelerated vesting of equity awards to certain terminated acquired employees.

Grubhub logo. (PRNewsFoto/GrubHub)

 

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