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8-K - FORM 8-K - GrubHub Inc.grub-8k_20171025.htm

 

Exhibit 99.1

 

GRUBHUB REPORTS RECORD THIRD QUARTER RESULTS

 

Grubhub generates 32% revenue growth in the third quarter

 

CHICAGO, Oct. 25, 2017 – Grubhub Inc. (NYSE: GRUB), the nation’s leading takeout marketplace, today announced financial results for the third quarter ended Sept. 30, 2017. For the third quarter, the Company posted revenues of $163.1 million, which is a 32% year-over-year increase from $123.5 million in the third quarter of 2016. Gross Food Sales grew 18% year-over-year to $867 million, up from $735 million in the year ago period.

 

“Grubhub’s goal is to give diners the most comprehensive restaurant selection, with the best option for every taste and every occasion. With the addition of the Eat24, Foodler and OrderUp restaurants to our network, we can help diners find their ideal local favorites better than ever before," said Grubhub CEO, Matt Maloney. "With a network of 75,000 restaurants and growing, we have the industry's largest online delivery marketplace, and we will continue to aggressively expand and deepen our reach, increasing our value to both diners and restaurant partners as we grow."

 

Third Quarter 2017 Highlights

 

The following results reflect the financial performance and key operating metrics of our business for the three months ended Sept. 30, 2017, as compared to the same period in 2016.

 

Third Quarter Financial Highlights

 

 

Revenues: $163.1 million, a 32% year-over-year increase from $123.5 million in the third quarter of 2016.

 

Net Income: $13.0 million, or $0.15 per diluted share, a 1% year-over-year decrease from $13.2 million, or $0.15 per diluted share, in the third quarter of 2016.

 

Non-GAAP Adjusted EBITDA: $43.0 million, a 21% year-over-year increase from $35.5 million in the third quarter of 2016.

 

Non-GAAP Net Income: $24.5 million, or $0.28 per diluted share, a 23% year-over-year increase from $19.9 million, or $0.23 per diluted share, in the third quarter of 2016.

 

Third Quarter Key Business Metrics Highlights

 

 

Active Diners were 9.81 million, a 28% year-over-year increase from 7.69 million Active Diners in the third quarter of 2016.

 

Daily Average Grubs (DAGs) were 304,500, a 14% year-over-year increase from 267,500 DAGs in the third quarter of 2016.

 

Gross Food Sales were $867 million, an 18% year-over-year increase from $735 million in the third quarter of 2016.

 

“Grubhub generated both record revenue of $163 million and record Adjusted EBITDA of $1.54 per order in our seasonally soft third quarter,” commented Grubhub CFO, Adam DeWitt. “Our ability to improve profit per order while simultaneously investing for growth through product improvements, restaurant sales, and broader consumer advertising underscores the financial strength of our model and the consistently growing value of our two-sided network."

 

Corporate Development

 

Grubhub has completed all three of its previously announced acquisitions for a total consideration of approximately $360 million in cash. Grubhub closed the acquisition of Foodler,


 

one of the leading online delivery platforms in New England, on Aug. 23, 2017, and closed the acquisition of 27 select OrderUp markets on Sept. 14, 2017. The contribution from these two acquisitions is included in Grubhub's third quarter financial and operational results as of the closing dates. Additionally, Grubhub completed the acquisition of Eat24 and commenced its partnership with Yelp, the leading company that connects people with great local businesses, on Oct. 10, 2017.

 

 

Fourth Quarter Guidance

 

Based on information available as of Oct. 25, 2017, the Company is providing the following financial guidance for the fourth quarter of 2017, which includes the impact of the Eat24, Foodler and OrderUp acquisitions:

 

 

Fourth Quarter 2017

 

(in millions)

Expected Revenue range

$197 - $205

Expected Adjusted EBITDA range

$51 - $56

 

 

Third Quarter 2017 Financial Results Conference Call 

Grubhub will webcast a conference call today at 9 a.m. CT to discuss the third quarter 2017 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. 8, 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 approximately 75,000 restaurant partners in over 1,300 U.S. cities and London. The Grubhub portfolio of brands includes Grubhub, Seamless, 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 Foodler, Eat24 and OrderUp and its strategic partnerships with Yelp and Groupon. 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, 2017, which is 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 September 30, 2017, 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 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.

 


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,

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Revenues

$

163,059

 

 

$

123,461

 

 

$

477,987

 

 

$

355,874

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operations and support

 

65,352

 

 

 

44,346

 

 

 

187,795

 

 

 

120,029

 

Sales and marketing

 

35,138

 

 

 

26,499

 

 

 

105,346

 

 

 

80,687

 

Technology (exclusive of amortization)

 

14,292

 

 

 

11,006

 

 

 

41,560

 

 

 

31,765

 

General and administrative

 

18,244

 

 

 

11,754

 

 

 

45,719

 

 

 

37,501

 

Depreciation and amortization

 

12,613

 

 

 

9,089

 

 

 

33,067

 

 

 

25,282

 

Total costs and expenses

 

145,639

 

 

 

102,694

 

 

 

413,487

 

 

 

295,264

 

Income before provision for income taxes

 

17,420

 

 

 

20,767

 

 

 

64,500

 

 

 

60,610

 

Provision for income taxes

 

4,432

 

 

 

7,585

 

 

 

19,043

 

 

 

24,690

 

Net income attributable to common stockholders

$

12,988

 

 

$

13,182

 

 

$

45,457

 

 

$

35,920

 

Net income per share attributable to common stockholders:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

$

0.15

 

 

$

0.15

 

 

$

0.53

 

 

$

0.42

 

Diluted

$

0.15

 

 

$

0.15

 

 

$

0.52

 

 

$

0.42

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

86,449

 

 

 

85,217

 

 

 

86,162

 

 

 

84,889

 

Diluted

 

88,543

 

 

 

86,424

 

 

 

87,788

 

 

 

85,957

 

 

KEY OPERATING METRICS

 

 

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30,

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Active Diners (000s)

 

9,806

 

 

 

7,685

 

 

 

9,806

 

 

 

7,685

 

Daily Average Grubs

 

304,500

 

 

 

267,500

 

 

 

314,200

 

 

 

268,800

 

Gross Food Sales (millions)

$

867.3

 

 

$

735.0

 

 

$

2,645.1

 

 

$

2,180.4

 

 


 

GRUBHUB INC.

 

CONSOLIDATED BALANCE SHEETS

 

(in thousands, except share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30,

2017

 

 

December 31, 

2016

 

ASSETS

 

 

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

 

 

Cash and cash equivalents

$

265,958

 

 

$

239,528

 

Short term investments

 

65,650

 

 

 

84,091

 

Accounts receivable, less allowances for doubtful accounts

 

73,745

 

 

 

60,550

 

Prepaid expenses and other current assets

 

9,430

 

 

 

12,168

 

Total current assets

 

414,783

 

 

 

396,337

 

PROPERTY AND EQUIPMENT:

 

 

 

 

 

 

 

Property and equipment, net of depreciation and amortization

 

62,225

 

 

 

46,555

 

OTHER ASSETS:

 

 

 

 

 

 

 

Other assets

 

4,130

 

 

 

4,530

 

Goodwill

 

454,557

 

 

 

436,455

 

Acquired intangible assets, net of amortization

 

360,549

 

 

 

313,630

 

Total other assets

 

819,236

 

 

 

754,615

 

TOTAL ASSETS

$

1,296,244

 

 

$

1,197,507

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

 

 

Restaurant food liability

$

89,021

 

 

$

83,349

 

Accounts payable

 

11,869

 

 

 

7,590

 

Accrued payroll

 

9,223

 

 

 

7,338

 

Taxes payable

 

244

 

 

 

865

 

Other accruals

 

23,211

 

 

 

11,348

 

Total current liabilities

 

133,568

 

 

 

110,490

 

LONG TERM LIABILITIES:

 

 

 

 

 

 

 

Deferred taxes, non-current

 

103,210

 

 

 

108,022

 

Other accruals

 

6,511

 

 

 

6,876

 

Total long term liabilities

 

109,721

 

 

 

114,898

 

STOCKHOLDERS’ EQUITY:

 

 

 

 

 

 

 

Common stock, $0.0001 par value

 

9

 

 

 

9

 

Accumulated other comprehensive loss

 

(1,329

)

 

 

(2,078

)

Additional paid-in capital

 

837,711

 

 

 

805,731

 

Retained earnings

 

216,564

 

 

 

168,457

 

Total Stockholders’ Equity

$

1,052,955

 

 

$

972,119

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$

1,296,244

 

 

$

1,197,507

 

 


 

GRUBHUB INC.

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30,

 

 

 

2017

 

 

2016

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

 

 

Net income

 

$

45,457

 

 

$

35,920

 

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

 

 

 

 

 

 

 

 

Depreciation

 

 

7,949

 

 

 

5,567

 

Provision for doubtful accounts

 

 

338

 

 

 

719

 

Deferred taxes

 

 

(2,162

)

 

 

(1,908

)

Amortization of intangible assets

 

 

25,118

 

 

 

19,715

 

Stock-based compensation

 

 

23,913

 

 

 

17,755

 

Deferred rent

 

 

130

 

 

 

980

 

Investment premium amortization

 

 

(624

)

 

 

(406

)

Other

 

 

150

 

 

 

114

 

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

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(12,108

)

 

 

(22,299

)

Prepaid expenses and other assets

 

 

2,790

 

 

 

(2,874

)

Restaurant food liability

 

 

4,591

 

 

 

11,361

 

Accounts payable

 

 

2,965

 

 

 

(4,592

)

Accrued payroll

 

 

1,575

 

 

 

582

 

Other accruals

 

 

6,351

 

 

 

1,799

 

Net cash provided by operating activities

 

 

106,433

 

 

 

62,433

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

 

 

Purchases of investments

 

 

(145,667

)

 

 

(187,456

)

Proceeds from maturity of investments

 

 

164,733

 

 

 

210,567

 

Capitalized website and development costs

 

 

(15,281

)

 

 

(8,859

)

Purchases of property and equipment

 

 

(12,549

)

 

 

(17,083

)

Acquisitions of businesses, net of cash acquired

 

 

(51,859

)

 

 

(65,849

)

Acquisition of other intangible assets

 

 

(25,147

)

 

 

(250

)

Other cash flows from investing activities

 

 

589

 

 

 

(540

)

Net cash used in investing activities

 

 

(85,181

)

 

 

(69,470

)

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

Repurchases of common stock

 

 

 

 

 

(14,774

)

Proceeds from exercise of stock options

 

 

12,505

 

 

 

11,814

 

Excess tax benefits related to stock-based compensation

 

 

 

 

 

22,114

 

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

 

 

(7,696

)

 

 

(1,205

)

Payments for debt issuance costs

 

 

(285

)

 

 

(1,477

)

Net cash provided by financing activities

 

 

4,524

 

 

 

16,472

 

Net change in cash and cash equivalents

 

 

25,776

 

 

 

9,435

 

Effect of exchange rates on cash

 

 

654

 

 

 

(890

)

Cash and cash equivalents at beginning of year

 

 

239,528

 

 

 

169,293

 

Cash and cash equivalents at end of the period

 

$

265,958

 

 

$

177,838

 

SUPPLEMENTAL DISCLOSURE OF NON CASH ITEMS

 

 

 

 

 

 

 

 

Cash paid for income taxes

 

$

16,340

 

 

$

5,757

 

 


 

GRUBHUB INC.

NON-GAAP FINANCIAL MEASURES RECONCILIATION

(in thousands, except per share data)

 

 

Three Months Ended

September 30, 2017

 

 

Nine Months Ended

September 30,

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Net income

$

12,988

 

 

$

13,182

 

 

$

45,457

 

 

$

35,920

 

Income taxes

 

4,432

 

 

 

7,585

 

 

 

19,043

 

 

 

24,690

 

Depreciation and amortization

 

12,613

 

 

 

9,089

 

 

 

33,067

 

 

 

25,282

 

EBITDA

 

30,033

 

 

 

29,856

 

 

 

97,567

 

 

 

85,892

 

Acquisition, restructuring and legal costs

 

4,539

 

 

 

261

 

 

 

6,443

 

 

 

1,789

 

Stock-based compensation

 

8,475

 

 

 

5,349

 

 

 

23,913

 

 

 

17,755

 

Adjusted EBITDA

$

43,047

 

 

$

35,466

 

 

$

127,923

 

 

$

105,436

 

 

 

Three Months Ended

September 30, 2017

 

 

Nine Months Ended

September 30,

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Net income

$

12,988

 

 

$

13,182

 

 

$

45,457

 

 

$

35,920

 

Stock-based compensation

 

8,475

 

 

 

5,349

 

 

 

23,913

 

 

 

17,755

 

Amortization of acquired intangible assets

 

6,455

 

 

 

5,385

 

 

 

16,828

 

 

 

16,070

 

Acquisition, restructuring and legal costs

 

4,539

 

 

 

261

 

 

 

6,443

 

 

 

1,789

 

Income tax adjustments

 

(7,936

)

 

 

(4,243

)

 

 

(19,770

)

 

 

(14,780

)

Non-GAAP net income

$

24,521

 

 

$

19,934

 

 

$

72,871

 

 

$

56,754

 

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

 

88,543

 

 

 

86,424

 

 

 

87,788

 

 

 

85,957

 

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

$

0.28

 

 

$

0.23

 

 

$

0.83

 

 

$

0.66

 

 

 

Guidance

 

 

Three Months Ended

December 31, 2017

 

 

Low

 

 

High

 

 

(in millions)

 

Net income

$

13.7

 

 

$

16.7

 

Income taxes

 

9.3

 

 

 

11.3

 

Interest expense ̶ net

 

1.0

 

 

 

1.0

 

Depreciation and amortization

 

17.5

 

 

 

17.5

 

EBITDA

 

41.5

 

 

 

46.5

 

Acquisition and restructuring costs

 

 

 

 

 

Stock-based compensation

 

9.5

 

 

 

9.5

 

Adjusted EBITDA

$

51.0

 

 

$

56.0