GrubHub Reports Second Quarter Results

July 24, 2014

Record revenues of $60.0 million, growth of 48%

Chicago, IL – July 24, 2014 – 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.

Anan Kashyap
Corporate Finance & Investor Relations
ir@grubhub.com

Abby Hunt
Press
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,
  ProForma Combined
2014 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