GRUB
$96.73
Grubhub
($1.54)
(1.57%)
Earnings Details
4th Quarter December 2017
Thursday, February 08, 2018 7:00:00 AM
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Summary

Grubhub Beats

Grubhub (GRUB) reported 4th Quarter December 2017 earnings of $0.38 per share on revenue of $205.1 million. The consensus earnings estimate was $0.31 per share on revenue of $201.2 million. The Earnings Whisper number was $0.33 per share. Revenue grew 49.2% on a year-over-year basis.

The company said it expects first quarter revenue of $224.0 million to $232.0 million and 2018 revenue of $910.0 million to $960.0 million. The current consensus estimate is revenue of $225.3 million for the quarter ending March 31, 2018 and revenue of $933.9 million for the year ending December 31, 2018.

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

Results
Reported Earnings
$0.38
Earnings Whisper
$0.33
Consensus Estimate
$0.31
Reported Revenue
$205.1 Mil
Revenue Estimate
$201.2 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Grubhub Reports Record Fourth Quarter Results

Grubhub Inc. (GRUB), the nation’s leading takeout marketplace, today announced financial results for the fourth quarter ended Dec. 31, 2017. For the fourth quarter, the Company posted revenues of $205.1 million, which is a 49% year-over-year increase from $137.5 million in the fourth quarter of 2016. Gross Food Sales grew 39% year-over-year to $1.1 billion, up from $818 million in the year ago period.

"Over the past two years we have taken incredible strides in expanding the breadth and depth of our restaurant network, growing the number of local restaurants we work with from 40,000 to over 80,000 today," said Grubhub CEO, Matt Maloney. "The partnership with Yum! which we announced this morning will accelerate the expansion of our delivery network and amplify our diner acquisition efforts, raising consumer awareness of online ordering and driving more volume for all restaurants across our platform."

Fourth Quarter and Full Year 2017 Highlights

The following results reflect the financial performance and key operating metrics of our business for the three and twelve months ended Dec. 31, 2017, as compared to the same periods in 2016.

Fourth Quarter Financial Highlights

Revenues: $205.1 million, a 49% year-over-year increase from $137.5 million in the fourth quarter of 2016.

Net Income: $53.5 million, or $0.60 per diluted share, a 293% year-over-year increase from $13.6 million, or $0.16 per diluted share, in the fourth quarter of 2016.

Non-GAAP Adjusted EBITDA: $57.0 million, a 45% year-over-year increase from $39.2 million in the fourth quarter of 2016.

Non-GAAP Net Income: $33.3 million, or $0.37 per diluted share, a 68% year-over-year increase from $19.8 million, or $0.23 per diluted share, in the fourth quarter of 2016.

Fourth Quarter Key Business Metrics Highlights

Active Diners were 14.5 million, a 77% year-over-year increase from 8.2 million Active Diners in the fourth quarter of 2016.

Daily Average Grubs (DAGs) were 392,500, a 34% year-over-year increase from 292,500 DAGs in the fourth quarter of 2016.

Gross Food Sales were $1.1 billion, a 39% year-over-year increase from $818 million in the fourth quarter of 2016.

Full Year Financial Highlights

-- Revenues: $683.1 million, a 38% year-over-year increase from $493.3 million in 2016.

Net Income: $99.0 million, or $1.12 per diluted share, a 100% year-over-year increase from $49.6 million, or $0.58 per diluted share, in 2016.

Non-GAAP Adjusted EBITDA: $184.0 million, a 27% year-over-year increase from $144.6 million in 2016.

Non-GAAP Net Income: $106.1 million, or $1.20 per diluted share, a 39% year-over-year increase from $76.6 million, or $0.89 per diluted share, in 2016.

Full Year Key Business Metrics Highlights

Active Diners were 14.5 million, a 77% year-over-year increase from 8.2 million Active Diners in 2016.

Daily Average Grubs (DAGs) were 334,000, a 22% year-over-year increase from 274,800 DAGs in 2016.

Gross Food Sales were $3.8 billion, a 26% year-over-year increase from $3.0 billion in 2016.

"Grubhub delivery has helped drive phenomenal growth for us, reaching an annualized run rate of over $1 billion dollars in GFS from close to zero in 2015," commented Grubhub President and CFO Adam DeWitt. "Our ability to scale delivery capabilities efficiently, combined with consistent execution on organic diner acquisition and merger integrations, enabled us to generate record EBITDA per order of $1.58 in the fourth quarter."

First Quarter and Full Year 2018 Guidance

Based on information available as of Feb. 8, 2018, the Company is providing the following financial guidance for the first quarter and full year of 2018:

First Quarter 2018
Full Year 2018
(in millions)
Expected Revenue range
$224 - $232
$910 - $960
Expected Adjusted EBITDA range $54 - $60
$225 - $255

Fourth Quarter 2017 Financial Results Conference Call

Grubhub will webcast a conference call today at 9 a.m. CT to discuss the fourth 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 Feb. 22, 2018.

About Grubhub

Grubhub (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 over 80,000 restaurant partners in over 1,600 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 acquisition of Eat24 and its commercial agreements with Yelp and Yum! Brands. 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 and our most recent Quarterly Report on Form 10-Q for the quarter ended Sep. 30, 2017, 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, 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, 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 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
Year Ended
December 31,
December 31,
2017
2016
2017
2016
Revenues
$
205,080
$
137,457
$
683,067
$
493,331
Costs and expenses:
Operations and support
81,658
51,727
269,453
171,756
Sales and marketing
45,384
29,636
150,730
110,323
Technology (exclusive of amortization)
14,703
10,689
56,263
42,454
General and administrative
18,396
12,435
65,023
50,482
Depreciation and amortization
18,781
9,911
51,848
35,193
Total costs and expenses
178,922
114,398
593,317
410,208
Income from operations
26,158
23,059
89,750
83,123
Interest (income) expense - net
1,010
(183)
102
(729)
Income before provision for income taxes
25,148
23,242
89,648
83,852
Income tax (benefit) expense
(28,378)
9,605
(9,335)
34,295
Net income attributable to common stockholders
$
53,526
$
13,637
$
98,983
$
49,557
Net income per share attributable to common stockholders:
Basic
$
0.62
$
0.16
$
1.15
$
0.58
Diluted
$
0.60
$
0.16
$
1.12
$
0.58
Weighted-average shares used to compute net income per share attributable to common stockholders:
Basic
86,702
85,608
86,297
85,069
Diluted
89,366
86,666
88,182
86,135
KEY OPERATING METRICS
Three Months Ended
Year Ended
December 31,
December 31,
2017
2016
2017
2016
Active Diners (000s)
14,462
8,174
14,462
8,174
Daily Average Grubs
392,500
292,500
334,000
274,800
Gross Food Sales (millions)
$
1,138.6
$
817.7
$
3,783.7
$
2,998.1
GRUBHUB INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
December 31, 2017
December 31, 2016
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
$
234,090
$
239,528
Short-term investments
23,605
84,091
Accounts receivable, less allowances for doubtful accounts
95,970
60,550
Prepaid expenses and other current assets
6,818
12,168
Total current assets
360,483
396,337
PROPERTY AND EQUIPMENT:
Property and equipment, net of depreciation and amortization
71,384
46,555
OTHER ASSETS:
Other assets
6,487
4,530
Goodwill
589,862
436,455
Acquired intangible assets, net of amortization
515,553
313,630
Total other assets
1,111,902
754,615
TOTAL ASSETS
$
1,543,769
$
1,197,507
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Restaurant food liability
$
119,922
$
83,349
Accounts payable
7,607
7,590
Accrued payroll
13,186
7,338
Taxes payable
3,109
865
Short-term debt
3,906
--
Other accruals
26,818
11,348
Total current liabilities
174,548
110,490
LONG-TERM LIABILITIES:
Deferred taxes, non-current
74,292
108,022
Other accruals
7,468
6,876
Long-term debt
169,645
--
Total long-term liabilities
251,405
114,898
STOCKHOLDERS’ EQUITY:
Common stock, $0.0001 par value
9
9
Accumulated other comprehensive loss
(1,228)
(2,078)
Additional paid-in capital
849,043
805,731
Retained earnings
269,992
168,457
Total Stockholders’ Equity
$
1,117,816
$
972,119
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
$
1,543,769
$
1,197,507
GRUBHUB INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Year Ended December 31,
2017
2016
CASH FLOWS FROM OPERATING ACTIVITIES
Net income
$
98,983
$
49,557
Adjustments to reconcile net income to net cash from operating activities:
Depreciation
11,775
8,921
Provision for doubtful accounts
1,424
1,102
Deferred taxes
(31,179)
1,027
Amortization of intangible assets
40,073
26,272
Stock-based compensation
32,748
23,559
Deferred rent
849
1,286
Amortization of deferred loan costs
487
365
Investment premium amortization
(739)
(612)
Other
436
(159)
Change in assets and liabilities, net of the effects of business acquisitions:
Accounts receivable
(27,833)
(17,488)
Prepaid expenses and other assets
4,112
(8,765)
Restaurant food liability
8,576
16,451
Accounts payable
(4,244)
(3,204)
Accrued payroll
5,537
1,819
Other accruals
11,735
(2,453)
Net cash provided by operating activities
152,740
97,678
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of investments
(154,758)
(226,694)
Proceeds from maturity of investments
215,983
284,662
Capitalized website and development costs
(21,325)
(12,809)
Purchases of property and equipment
(18,971)
(24,087)
Acquisitions of businesses, net of cash acquired
(333,301)
(65,849)
Acquisition of other intangible assets
(25,147)
(250)
Other cash flows from investing activities
557
(492)
Net cash used in investing activities
(336,962)
(45,519)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings under the credit facility
200,000
--
Repayments of borrowings under the credit facility
(25,781)
--
Repurchases of common stock
--
(14,774)
Proceeds from exercise of stock options
16,375
13,468
Excess tax benefits related to stock-based compensation
--
24,906
Taxes paid related to net settlement of stock-based compensation awards
(10,556)
(2,779)
Payments for debt issuance costs
(1,979)
(1,477)
Net cash provided by financing activities
178,059
19,344
Net change in cash and cash equivalents
(6,163)
71,503
Effect of exchange rates on cash
725
(1,268)
Cash and cash equivalents at beginning of year
239,528
169,293
Cash and cash equivalents at end of the period
$
234,090
$
239,528
SUPPLEMENTAL DISCLOSURE OF NON CASH ITEMS
Cash paid for income taxes
$
19,148
$
8,722
GRUBHUB INC.
NON-GAAP FINANCIAL MEASURES RECONCILIATION
(in thousands, except per share data)
Three Months Ended
Year Ended
December 31,
December 31,
2017
2016
2017
2016
Net income
$
53,526
$
13,637
$
98,983
$
49,557
Income taxes
(28,378)
9,605
(9,335)
34,295
Interest (income) expense - net(a)
1,010
--
102
--
Depreciation and amortization
18,781
9,911
51,848
35,193
EBITDA
44,939
33,153
141,598
119,045
Acquisition, restructuring and legal costs
3,199
253
9,642
2,042
Stock-based compensation
8,835
5,804
32,748
23,559
Adjusted EBITDA
$
56,973
$
39,210
$
183,988
$
144,646
(a) Due to interest incurred on borrowings under the Company’s credit facility during the three months ended December 31, 2017, the Company has updated its calculation of Adjusted EBITDA to include net interest expense. The Company did not recast periods prior to 2017 due to the insignificance of net interest (income) expense in those periods. Recast Adjusted EBITDA for the three months ended March 31, 2017, June 30, 2017 and September 30, 2017 includes net interest income of $0.2 million, $0.3 million and $0.4 million, respectively. There were no changes to the Company’s GAAP results as a result of this change in presentation.
Three Months Ended
Year Ended
December 31,
December 31,
2017
2016
2017
2016
Net income
$
53,526
$
13,637
$
98,983
$
49,557
Stock-based compensation
8,835
5,804
32,748
23,559
Amortization of acquired intangible assets
11,238
4,801
28,066
20,871
Acquisition, restructuring and legal costs
3,199
253
9,642
2,042
Income tax benefit of the U.S. Tax Act
(34,054)
--
(34,054)
--
Income tax adjustments
(9,469)
(4,692)
(29,239)
(19,472)
Non-GAAP net income
$
33,275
$
19,803
$
106,146
$
76,557
Weighted-average diluted shares used to compute net income per share attributable to common stockholders
89,366
86,666
88,182
86,135
Non-GAAP net income per diluted share attributable to common stockholders
$
0.37
$
0.23
$
1.20
$
0.89
Guidance
Three Months Ended
Year Ended
March 31, 2018
December 31, 2018
Low
High
Low
High
(in millions)
Net income
$
16.2
$
20.5
$
65.6
$
87.2
Income taxes
6.3
8.0
25.4
33.8
Interest expense ? net
1.0
1.0
4.0
4.0
Depreciation and amortization
20.0
20.0
82.0
82.0
EBITDA
43.5
49.5
177.0
207.0
Acquisition and restructuring costs
--
--
--
--
Stock-based compensation
10.5
10.5
48.0
48.0
Adjusted EBITDA
$
54.0
$
60.0
$
225.0
$
255.0

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