Grubhub Reports Second Quarter 2019 Results
CHICAGO, July 30, 2019 /PRNewswire/ -- Grubhub Inc. (NYSE: GRUB), the nation's leading online and mobile food-ordering and delivery marketplace, today announced financial results for the second quarter ended June 30, 2019. The Company posted revenues of $325 million, which is a 36% year-over-year increase from $240 million in the second quarter of 2018. Gross Food Sales grew 20% year-over-year to $1.5 billion, up from $1.2 billion in the same period last year.
"The team continued executing in the second quarter, adding thousands of new, high-quality independent and enterprise restaurants and growing our active diner base to more than 20 million," said Matt Maloney, Grubhub founder and CEO. "We are excited about the trajectory of our two-sided marketplace - both in terms of geographic diversity and depth in individual markets. Restaurants are increasingly valuing the incremental sales and products we provide, while diners highly regard our robust restaurant selection and consistently low transaction fees."
Second Quarter 2019 Highlights
The following results reflect the financial performance and key operating metrics of our business for the three months ended June 30, 2019, as compared to the same period in 2018.
Second Quarter Financial Highlights
-- Revenues: $325.1 million, a 36% year-over-year increase from $239.7
million in the second quarter of 2018.
-- Net Income: $1.3 million, or $0.01 per diluted share, a 96%
year-over-year decrease from $30.1 million, or $0.33 per diluted share,
in the second quarter of 2018.
-- Non-GAAP Adjusted EBITDA: $54.7 million, a 19% year-over-year decrease
from $67.4 million in the second quarter of 2018.
-- Non-GAAP Net Income: $24.9 million, or $0.27 per diluted share, a 46%
year-over-year decrease from $46.3 million, or $0.50 per diluted share,
in the second quarter of 2018.
Second Quarter Key Business Metrics Highlights(1)
-- Active Diners: 20.3 million, a 30% year-over-year increase from 15.6
million Active Diners in the second quarter of 2018.
-- Daily Average Grubs (DAGs): 488,900, a 16% year-over-year increase from
423,200 DAGs in the second quarter of 2018.
-- Gross Food Sales: $1.5 billion, a 20% year-over-year increase from $1.2
billion in the second quarter of 2018.
"Our Adjusted EBITDA per order increased by $0.14 from the first quarter to $1.23 despite the headwind of the seasonally slower second quarter. This sequential improvement was primarily driven by increasing delivery efficiency, especially in our quickly ramping recently launched markets," said Adam DeWitt, Grubhub president and CFO. "We have achieved this profitability improvement while extending our delivery business into smaller and less dense markets, setting us up for continued unit economic improvement as we head into our seasonally stronger months at the end of the year."
Third Quarter and Full Year 2019 Guidance
Based on information available as of July 30, 2019, the Company is providing the following financial guidance for the third quarter and full year of 2019.
Third Quarter 2019
Full Year 2019
(in millions)
Expected
Revenue range
$320 - $340
$1,340 - $1,390
Expected
Adjusted
EBITDA range
$53 - $60
$235 - $250
Second Quarter 2019 Financial Results Conference Call
Grubhub will webcast a conference call today at 9:00 a.m. CT to discuss the second quarter 2019 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 125,000 restaurant partners in over 2,400 U.S. cities and London. The Grubhub portfolio of brands includes Grubhub, Seamless, LevelUp, Tapingo, 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, 2019, which is on file with the SEC and is available on the Investor Relations section of our website at https://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 June 30, 2019, 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 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 "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.
(_____________________________
1) Key Business Metrics are defined on page 29 of our Annual Report on Form 10-K filed on February 28, 2019.
GRUBHUB INC.
STATEMENTS OF OPERATIONS
(in thousands, except per share data)
Three Months Ended Six Months Ended
June 30,
June 30,
2019 2018 2019 2018
Revenues $
325,058 $
239,741 $
648,828 $
472,311
Costs and expenses:
Operations and support 162,406 102,445 323,756 198,728
Sales and marketing 74,128 46,231 152,582 94,987
Technology (exclusive of
amortization) 29,400 18,717 56,650 36,048
General and administrative 25,784 18,180 48,571 35,877
Depreciation and amortization 27,223 19,849 52,312 40,800
Total costs and expenses 318,941 205,422 633,871 406,440
Income from operations 6,117 34,319 14,957 65,871
Interest expense - net 5,467 8 8,279 1,030
Income before provision for income
taxes 650 34,311 6,678 64,841
Income tax (benefit) expense (602) 4,191 (1,464) 3,955
Net income attributable to
common stockholders $
1,252 $
30,120 $
8,142 $
60,886
Net income per share attributable to
common stockholders:
Basic $
0.01 $
0.34 $
0.09 $
0.69
Diluted $
0.01 $
0.33 $
0.09 $
0.67
Weighted-average shares used to
compute net income per share
attributable to common stockholders:
Basic 91,177 89,503 91,064 88,294
Diluted 92,786 92,503 92,852 91,297
KEY BUSINESS METRICS
Three Months Ended Six Months Ended
June 30, June 30,
2019 2018 2019 2018
Active Diners
(000s) 20,288 15,581 20,288 15,581
Daily Average
Grubs 488,900 423,200 504,900 430,000
Gross Food Sales
(millions) $
1,459 $
1,220 $
2,962 $
2,465
GRUBHUB INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
June 30, 2019 December
31,
2018
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $
358,847 $
211,245
Short-term investments 18,190 14,084
Accounts receivable, less allowances for doubtful accounts 123,801 110,855
Income tax receivable 9,520 9,949
Prepaid expenses and other current assets 23,752 17,642
Total current assets 534,110 363,775
PROPERTY AND EQUIPMENT:
Property and equipment, net of depreciation and amortization 148,995 119,495
OTHER ASSETS:
Other assets 23,166 14,186
Operating lease right-of-use asset 104,078
Goodwill 1,005,477 1,019,239
Acquired intangible assets, net of amortization 527,423 549,013
Total other assets 1,660,144 1,582,438
TOTAL ASSETS $
2,343,249 $
2,065,708
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Restaurant food liability $
124,261 $
127,344
Accounts payable 21,527 26,656
Accrued payroll 21,296 18,173
Current portion of long-term debt 6,250
Current operating lease liability 6,875
Other accruals 46,697 44,745
Total current liabilities 220,656 223,168
LONG-TERM LIABILITIES:
Deferred taxes, non-current 32,695 46,383
Noncurrent operating lease liability 114,724
Long-term debt 492,723 335,548
Other accruals 751 18,270
Total long-term liabilities 640,893 400,201
STOCKHOLDERS' EQUITY:
Common stock, $0.0001 par value 9 9
Accumulated other comprehensive loss (1,980) (1,891)
Additional paid-in capital 1,126,174 1,094,866
Retained earnings 357,497 349,355
Total Stockholders' Equity $
1,481,700 $
1,442,339
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $
2,343,249 $
2,065,708
GRUBHUB INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Six Months Ended June 30,
2019 2018
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $
8,142 $
60,886
Adjustments to reconcile net income to net
cash from operating activities:
Depreciation 13,626 10,526
Deferred taxes 298 (3,308)
Amortization of intangible assets and
developed software 38,686 30,274
Stock-based compensation 36,527 22,170
Other 3,240 3,042
Change in assets and liabilities, net of the
effects of business acquisitions:
Accounts receivable (13,349) 3,888
Income taxes receivable 429 1,882
Prepaid expenses and other assets (14,857) (8,446)
Restaurant food liability (3,078) (9,870)
Accounts payable (10,216) (107)
Accrued payroll 3,122 (1,961)
Other accruals 7,219 7,041
Net cash provided by operating activities 69,789 116,017
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of investments (25,526) (44,271)
Proceeds from maturity of investments 21,636 29,116
Capitalized website and development costs (22,188) (13,145)
Purchases of property and equipment (23,140) (19,266)
Acquisition of other intangible assets (8,889)
Acquisitions of businesses, net of cash
acquired 127 737
Other cash flows from investing activities 24
Net cash used in investing activities (57,980) (46,805)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of senior notes 500,000
Repayments of borrowings under the credit
facility (342,313) (51,562)
Proceeds from the issuance of common stock 200,000
Taxes paid related to net settlement of
stock-based compensation awards (15,360) (18,717)
Proceeds from exercise of stock options 2,930 9,958
Payments for debt issuance costs (8,954)
Net cash provided by financing activities 136,303 139,679
Net change in cash, cash equivalents, and
restricted cash 148,112 208,891
Effect of exchange rates on cash, cash
equivalents and restricted cash (2) (318)
Cash, cash equivalents, and restricted cash
at beginning of year 215,802 238,239
Cash, cash equivalents, and restricted cash
at end of the period $
363,912 $
446,812
SUPPLEMENTAL DISCLOSURE OF NON-CASH ITEMS
Cash paid for income taxes $
567 $
7,426
GRUBHUB INC.
NON-GAAP FINANCIAL MEASURES RECONCILIATION
(in thousands, except per share data)
Three Months Ended Six Months Ended
June 30,
June 30,
2019 2018 2019 2018
Net income $
1,252 $
30,120 $
8,142 $
60,886
Income taxes (602) 4,191 (1,464) 3,955
Interest expense - net 5,467 1 8 8,279 1 1,030
Depreciation and amortization 27,223 19,849 52,312 40,800
EBITDA 33,340 54,168 67,269 106,671
Acquisition, restructuring and legal
costs 1,341 1,312 1,827 2,641
Stock-based compensation 20,049 2 11,939 36,527 2 22,170
Adjusted EBITDA $
54,730 $
67,419 $
105,623 $
131,482
Three Months Ended Six Months Ended
June 30, June 30,
2019 2018 2019 2018
Net income $
1,252 $
30,120 $
8,142 $
60,886
Stock-based compensation 20,049 (2) 11,939 36,527 (2) 22,170
Amortization of acquired intangible
assets 11,828 9,527 23,770 21,070
Acquisition, restructuring and legal
costs 1,341 1,312 1,827 2,641
Income tax adjustments (9,595) (6,628) (17,457) (13,305)
Non-GAAP net income $
24,875 $
46,270 $
52,809 $
93,462
Weighted-average diluted shares used
to compute net income per share
attributable to common stockholders 92,786 92,503 92,852 91,297
Non-GAAP net income per
diluted share attributable
to common stockholders $
0.27 $
0.50 $
0.57 $
1.02
Guidance
Three Months Ended Year Ended
September 30, 2019 December 31, 2019
Low High Low High
(in millions)
Net income (loss) $
(1.6) $
2.8 $
18.8 $
28.1
Income taxes (0.9) 1.7 5.1 10.8
Interest expense ? net 6.5 6.5 21.3 21.3
Depreciation and
amortization 30.0 30.0 114.0 114.0
EBITDA 34.0 41.0 159.2 174.2
Acquisition and
restructuring costs 1.8 1.8
Stock-based compensation 19.0 19.0 74.0 74.0
Adjusted EBITDA $
53.0 $
60.0 $
235.0 $
250.0
((_____________________________
))(1) Interest expense for the three and six months ended June 30, 2019 included $1.8 million and $1.9 million, respectively, of expense for the write-off of unamortized debt issuance costs in February and June of 2019.
(2 )Stock-based compensation for the three and six months ended June 30, 2019 included $1.6 million of expense related to the accelerated vesting of equity awards to a terminated acquired employee.
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SOURCE Grubhub Inc.
