GrubHub Reports Second Quarter Results Record revenues of $60.0 million, growth of 48%

CHICAGO, July 24, 2014 /PRNewswire/ -- GrubHub Inc. (NYSE: GRUB), the leading online and mobile food-ordering company, today announced financial results for the quarter ended June 30, 2014.

"GrubHub continued to execute against the large opportunity in takeout in the second quarter, driving significant year over year growth in revenues, adjusted EBITDA, and all of our key metrics," said Matt Maloney, CEO. "We generated record revenues in the second quarter despite both an expected seasonal slowdown and an unusually cold winter that drove record orders in the first quarter."

Second Quarter 2014 Results

The following results reflect the financial performance and key operating metrics of our business for the three months ended June 30, 2014, compared to the non-GAAP pro forma combined results of Seamless Holdings and GrubHub Holdings for the three months ended June 30, 2013, giving effect to the August 2013 merger of the two companies.

Financial Highlights

  • Revenues: $60.0 million, a 48% year-over-year increase from $40.7 million in the second quarter of 2013.
  • Non-GAAP Adjusted EBITDA: $16.9 million, a 56% year-over-year increase from $10.8 million in the second quarter of 2013.
  • Net Income: $2.7 million, a 930% year-over-year increase from $0.3 million in the second quarter of 2013.

Key Business Metrics Highlights

  • Active Diners grew 51% to 4.19 million, compared to 2.78 million active diners in the second quarter of 2013.
  • GrubHub Inc. processed 174,500 Daily Average Grubs, a 34% year-over-year increase from 130,100 Daily Average Grubs in the second quarter of 2013.
  • GrubHub Inc. processed $423 million in gross food sales, a 38% year-over-year increase from $307 million processed in the second quarter of 2013.

"We're pleased with the initial roll-out of restaurant-driven pricing to the Seamless brand in April, which had a positive impact on overall commission rates during the quarter," noted Maloney. "In addition, by maintaining our seasonally higher first quarter advertising spending in the second quarter, we continued to add new diners at a healthy rate, particularly in areas outside of our largest markets."

Third Quarter 2014 Guidance

Based on information available as of July 24, 2014, the company is providing the following financial guidance for the third quarter:

  • Revenue is expected to be in the range of $55.5 million to $57.5 million.
  • Adjusted EBITDA is expected to be in the range of $13 million to $15 million.

Second Quarter 2014 Financial Results Conference Call: GrubHub will webcast a conference call today at 9 a.m. CT to discuss the second quarter 2014 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 August 7, 2014.

About GrubHub
GrubHub Inc. (NYSE: GRUB) is the nation's leading online and mobile food ordering company dedicated to connecting hungry diners with local takeout restaurants. The company's online and mobile ordering platforms allow diners to order directly from approximately 30,000 takeout restaurants in more than 700 U.S. cities and London. Every order is supported by the company's 24/7 customer service teams.

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. Such statements constitute "forward-looking" statements, which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The outcome of the matters covered by such forward-looking statements involves risks, uncertainties and assumptions. If any of these risks or uncertainties materialize or if any of the assumptions prove incorrect, our actual results, performance or achievements could be materially different 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 the company's Prospectus filed on April 7th, 2014 and additional information that will be set forth in our Form 10-Q that will be filed for the quarter ended June 30, 2014, which should be read in conjunction with these financial results. These documents are available on the SEC Filings section of the Investor Relations section of our website at http://investors.grubhub.com/. 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 update these forward-looking statements publicly, 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 is a financial measure that is 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 merger and restructuring costs, income taxes, depreciation and amortization and stock-based compensation expense.  We use Adjusted EBITDA as a key performance measure because we believe it facilitates 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 is not a measurement 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 Adjusted EBITDA Reconciliation - Pro Forma" below for a reconciliation of net income to Adjusted EBITDA.


Contacts:






Anan Kashyap 

Abby Hunt


Corporate Finance & Investor Relations 

Press


ir@grubhub.com

press@grubhub.com

 


NON-GAAP PRO FORMA FINANCIAL INFORMATION



     On August 8, 2013, GrubHub Inc. acquired all of the equity interests of each of Seamless North America, LLC, Seamless Holdings and GrubHub Holdings (the "Merger"). The following Unaudited Pro Forma Condensed Statement of Operations was derived from the unaudited historical statement of operations of Seamless Holdings (Acquirer) for the three months ended June 30, 2013 and the unaudited historical statement of operations of GrubHub Holdings (Acquiree) for the three months ended June 30, 2013, adjusted for income taxes at the Company's historical effective tax rate.




Three Months Ended
June 30,


2014


ProForma
Combined
 
2013


(in thousands)

Revenues

$

60,006


$

40,650

Costs and expenses:






Sales and marketing


16,168



10,568

Operations and support


14,734



10,823

Technology (exclusive of amortization)


6,066



4,201

General and administrative


8,620



11,916

Depreciation and amortization


5,615



2,561

Total costs and expenses


51,203



40,069

Income before provision for income taxes


8,803



581

Provision for income taxes


6,111



320

Net income

$

2,692


$

261

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






Basic

$

0.03


$

(0.01)

Diluted

$

0.03


$

0.00

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

 






Basic


78,042



54,692

Diluted


82,074



74,983


KEY PRO FORMA OPERATING METRICS




Three Months Ended June 30,


2014


2013
 
Pro Forma

Active Diners (000s)


4,190



2,780

Daily Average Grubs


174,500



130,100

Gross Food Sales (millions)

$

422.6


$

306.7

 

 

GRUBHUB INC.

CONDENSED CONSOLIDATED BALANCE SHEETS - UNAUDITED

(in thousands, except share data)







 June 30,
2014
(Unaudited)


December 31, 2013

ASSETS






CURRENT ASSETS:






Cash and cash equivalents

$

207,096


$

86,542

Accounts receivable, less allowances for doubtful accounts


37,863



29,304

Deferred taxes, current


3,688



3,688

Prepaid expenses


2,505



2,625

Total current assets


251,152



122,159

PROPERTY AND EQUIPMENT:






Property and equipment, net of depreciation and amortization


16,529



17,096

OTHER ASSETS:






Other assets


4,039



2,328

Goodwill


352,788



352,788

Acquired intangible assets, net of amortization


261,390



268,441

Total other assets


618,217



623,557

TOTAL ASSETS

$

885,898


$

762,812

LIABILITIES, REDEEMABLE COMMON STOCK AND STOCKHOLDERS' EQUITY






CURRENT LIABILITIES:






Restaurant food liability

$

84,486


$

78,245

Accounts payable


2,390



3,353

Accrued payroll


3,441



1,720

Taxes payable


1,377



1,768

Restructuring accrual


478



176

Other accruals


9,850



7,329

Total current liabilities


102,022



92,591

LONG TERM LIABILITIES:






Deferred taxes, non-current


98,633



90,495

Other accruals


3,939



3,936

Total long term liabilities


102,572



94,431

Commitments and Contingencies






Redeemable common stock, $0.0001 par value, no shares and 1,344,236 shares outstanding as of June 30, 2014 and December 31, 2013, respectively




18,415

STOCKHOLDERS' EQUITY:






Series A Convertible Preferred Stock, $0.0001 par value




2

Common stock, $0.0001 par value.


8



5

Accumulated other comprehensive income


316



132

Additional paid-in capital


617,375



500,356

Retained earnings


63,605



56,880

Total Stockholders' Equity

$

681,304


$

557,375

TOTAL LIABILITIES, REDEEMABLE COMMON STOCK AND STOCKHOLDERS' EQUITY

$

885,898


$

762,812

 

GRUBHUB INC.

CONDENSED STATEMENTS OF OPERATIONS - UNAUDITED

(in thousands, except per share data)














Three Months Ended
June 30,


Six Months Ended

June 30,


2014


2013


2014


2013

Revenues

$

60,006


$

26,857


$

118,619


$

52,658

Costs and expenses:












Sales and marketing


16,168



6,064



32,285



16,164

Operations and support


14,734



5,998



29,841



11,975

Technology (exclusive of amortization)


6,066



2,697



11,413



5,344

General and administrative


8,620



5,809



16,944



8,712

Depreciation and amortization


5,615



1,877



11,130



3,673

Total costs and expenses


51,203



22,445



101,613



45,868

Income before provision for income taxes


8,803



4,412



17,006



6,790

Provision for income taxes


6,111



2,589



9,961



3,711

Net income

$

2,692


$

1,823


$

7,045


$

3,079

Net income per share attributable to common stockholders:












Basic

$

0.03


$

0.04


$

0.10


$

0.08

Diluted

$

0.03


$

0.04


$

0.09


$

0.07

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












Basic


78,042



31,373



66,626



31,368

Diluted


82,074



43,566



79,854



43,356

 

GRUBHUB INC.

CONDENSED STATEMENTS OF CASH FLOWS - UNAUDITED

(in thousands)








Six Months Ended June 30,


2014


2013

CASH FLOWS FROM OPERATING ACTIVITIES






Net income

$

7,045


$

3,079

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






Depreciation


2,390



1,278

Provision for doubtful accounts


166



86

Deferred taxes


8,138



(151)

Intangible asset amortization


8,740



2,395

Tenant allowance amortization


(79)



(79)

Stock based compensation


4,687



1,238

Deferred rent


76



(64)

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






Accounts receivable


(8,725)



(7,081)

Prepaid expenses and other assets


(1,592)



452

Accounts payable


(962)



1,510

Restaurant food liability


6,241



11,184

Accrued payroll


1,721



1,192

Other accruals


2,439



4,376

Net cash provided by operating activities


30,285



19,415







CASH FLOWS FROM INVESTING ACTIVITIES






Capitalized website and development costs


(1,112)



(1,434)

Purchases of property and equipment


(2,378)



(3,170)

Net cash used in investing activities


(3,490)



(4,604)







CASH FLOWS FROM FINANCING ACTIVITIES






Net proceeds from the issuance of common stock


94,927



Proceeds from exercise of stock options


1,145



104

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


(2,061)



Repurchases of common stock


(116)



(1,259)

Preferred stock tax distributions


(320)



(651)

Net cash provided by (used in) financing activities


93,575



(1,806)







Net change in cash and cash equivalents


120,370



13,005

Effect of exchange rates on cash


184



(225)

Cash and cash equivalents at beginning of year


86,542



41,161

Cash and cash equivalents at end of the period

$

207,096


$

53,941







SUPPLEMENTAL DISCLOSURE OF NON CASH ITEMS






Cash paid for income taxes

$

1,321


$

2,243

 

NON-GAAP ADJUSTED EBITDA RECONCILATION – PRO FORMA



Three Months Ended

June 30,


Six Months Ended

June 30,


2014


2013
Pro Forma


2014


2013
Pro Forma


(in thousands)

Net income

$

2,692


$

261


$

7,045


$

920

Income taxes


6,111



320



9,961



1,125

Depreciation and amortization


5,615



2,561



11,130



4,975

EBITDA


14,418



3,142



28,136



7,020

Merger and restructuring costs


207



6,669



492



7,430

Stock-based compensation


2,284



1,022



4,687



2,010

Adjusted EBITDA

$

16,909


$

10,833


$

33,315


$

16,460

 

SOURCE GrubHub Inc.



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