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GrubHub Reports First Quarter Results

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SOURCE GrubHub Inc.

Record revenues of $58.6 million, growth of 49%

CHICAGO, May 8, 2014 /PRNewswire/ -- GrubHub Inc. (NYSE: GRUB), the leading online and mobile food-ordering company, today announced financial results for the quarter ended March 31, 2014.

"We are off to a strong start as a public company with record active diners, orders and revenues in the first quarter, continuing the robust growth momentum we had throughout 2013," said Matt Maloney, GrubHub CEO. "We remain focused on making takeout better by continuing product innovation, driving more orders to independent restaurants and creating more transparency and control for diners."

First Quarter 2014 Results

The following results reflect the financial performance and key operating metrics of our business for the three months ended March 31, 2014, compared to the non-GAAP pro forma combined results of Seamless Holdings and GrubHub Holdings for the three months ended March 31, 2013, giving effect to the August 2013 merger of the two companies.

Financial Highlights

  • Revenues: $58.6 million, a 49% year-over-year increase from $39.4 million in the first quarter of 2013.
  • Non-GAAP Adjusted EBITDA: $16.4 million, a 192% year-over-year increase from $5.6 million in the first quarter of 2013.
  • Net Income: $4.4 million, a 561% year-over-year increase from $0.7 million in the first quarter of 2013.
  • Our April 4th, 2014, Initial Public Offering included the sale of 4 million shares of our common stock at $26 per share, which generated $95.5 million in cash for the company (after fees and expenses).

Key Business Metrics Highlights

  • Active Diners grew 49% to 3.85 million, compared to 2.58 million diners in the first quarter of 2013.
  • GrubHub Inc. processed 181,200 Daily Average Grubs, a 40% year-over-year increase from 129,100 Daily Average Grubs in the first quarter of 2013.
  • GrubHub Inc. processed $433 million in gross food sales, a 44% year-over-year increase from $300 million processed in the first quarter of 2013.

Second Quarter 2014 Guidance

Based on information available as of May 8th, 2014, the company is providing the following financial guidance:

  • Revenue is expected to be in the range of $53 million to $55 million.
  • Adjusted EBITDA is expected to be in the range of $13 million to $15 million.

"The market for GrubHub is substantial with Americans spending roughly $67 billion every year on takeout from independent restaurants. Less than five percent of those purchases are made online or through a mobile device," noted Maloney. "We are pleased with the scale we have achieved, with $1.4 billion in gross food sales processed through our platforms in the last 12 months.  And, as the clear leader in this large market, we are even more excited about the sizeable opportunity in front of us."

First Quarter 2014 Financial Results Conference Call: GrubHub will webcast a conference call today at 5 p.m. ET to discuss the first 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. Following the webcast, a replay of it will be available at the same website until May 22, 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 29,000 takeout restaurants in more than 700 U.S. cities and London. Every order is supported by the company's 24/7 customer service teams.

Contacts:


Anan Kashyap

Abby Hunt


Corporate Finance & Investor Relations

Press


ir@grubhub.com

press@grubhub.com

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 March 31, 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.

 

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 March 31, 2013 and the unaudited historical statement of operations of GrubHub Holdings (Acquiree) for the three months ended March 31, 2013, adjusted for income taxes at the Company's historical effective tax rate.



 

Three Months Ended

March 31, 2014


Three Months Ended
March 31, 2013

Pro Forma
Combined


(in thousands)




Revenues

$

58,613


$

39,377

Costs and expenses






Sales and marketing


16,117



14,946

Operations and support


15,107



10,687

Technology (exclusive of amortization)


5,347



4,307

General and administrative


8,324



5,559

Depreciation and amortization


5,515



2,414

Total operating expenses


50,410



37,913

Income before provision for income taxes


8,203



1,464

Provision for income taxes


3,850



805

Net income attributable to common stockholders

$

4,353


$

659

Net income per share attributable to common stockholders:






Basic

$

0.08


$

0.01

Diluted

$

0.06


$

0.01

Weighted average number of shares outstanding:






Basic


55,210



54,682

Diluted


77,635



74,563




KEY PRO FORMA OPERATING METRICS



Three Months Ended March 31,


2014


2013

Pro Forma

Active Diners (000s)


3,851



2,577

Daily Average Grubs


181,200



129,100

Gross Food Sales (millions)

$

433.0


$

300.0

 

 

GRUBHUB INC.

CONDENSED STATEMENTS OF OPERATIONS - UNAUDITED

(in thousands, except per share data)



Three Months Ended

March 31,


2014


2013

Revenues

$

58,613


$

25,801

Costs and expenses:






Sales and marketing


16,117



10,100

Operations and support


15,107



5,977

Technology (exclusive of amortization)


5,347



2,647

General and administrative


8,324



2,903

Depreciation and amortization


5,515



1,796

Total costs and expenses


50,410



23,423

Income before provision for income taxes


8,203



2,378

Provision for income taxes


3,850



1,122

Net income attributable to common stockholders

$

4,353


$

1,256

Net income per share attributable to common stockholders:






Basic

$

0.08


$

0.04

Diluted

$

0.06


$

0.03

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






Basic


55,210



31,364

Diluted


77,635



43,146

 

 

GRUBHUB INC.

CONDENSED CONSOLIDATED BALANCE SHEETS - UNAUDITED

(in thousands, except share data)



March 31,

2014


December 31,
2013

ASSETS






CURRENT ASSETS:






Cash and cash equivalents

$

112,760


$

86,542

Accounts receivable


38,116



27,725

Income taxes receivable


1,821



1,579

Deferred taxes, current


3,688



3,688

Prepaid expenses


2,352



2,625

Total current assets


158,737



122,159

PROPERTY AND EQUIPMENT:






Property and equipment, net of depreciation and amortization


17,332



17,096

OTHER ASSETS:






Other assets


1,975



2,328

Goodwill


352,788



352,788

Acquired intangible assets, net of amortization


264,915



268,441

Total other assets


619,678



623,557

TOTAL ASSETS

$

795,747


$

762,812

LIABILITIES, REDEEMABLE COMMON STOCK AND STOCKHOLDERS' EQUITY






CURRENT LIABILITIES:






Accounts payable

$

3,297


$

3,353

Restaurant food liability


96,923



78,245

Taxes payable


1,046



1,768

Accrued payroll


2,663



1,720

Other accruals


11,085



7,505

Total current liabilities


115,014



92,591

LONG TERM LIABILITIES:






Deferred taxes, non-current


94,805



90,495

Other accruals


2,775



3,936

Total long term liabilities


97,580



94,431







Redeemable common stock


34,950



18,415

STOCKHOLDERS' EQUITY:






Series A Convertible Preferred Stock


2



2

Common stock


5



5

Accumulated other comprehensive income


181



132

Additional paid-in capital


486,782



500,356

Retained earnings


61,233



56,880

Total Stockholders' Equity

$

548,203


$

557,375

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

795,747


$

762,812

 

 


GRUBHUB INC. ("GRUBHUB")

CONDENSED STATEMENTS OF CASH FLOWS - UNAUDITED

(in thousands)


Three Months Ended

March 31,


2014


2013

CASH FLOWS FROM OPERATING ACTIVITIES






Net income

$

4,353


$

1,256

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






Depreciation


1,168



616

Provision for doubtful accounts


361



20

Deferred taxes


3,208



(152)

Intangible asset amortization


4,347



1,180

Tenant allowance amortization


(40)



(39)

Stock based compensation


2,403



621

Deferred rent


(21)



(31)

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






Accounts receivable


(10,752)



(6,374)

Income taxes receivable


(242)



-

Prepaid expenses and other assets


626



323

Accounts payable


(56)



2,401

Restaurant food liability


18,678



14,160

Accrued payroll


943



570

Other accruals


2,860



(31)

Net cash provided by operating activities


27,836



14,520







CASH FLOWS FROM INVESTING ACTIVITIES






Capitalized website and development costs


(449)



(676)

Purchases of property and equipment


(1,776)



(2,711)

Net cash used in investing activities


(2,225)



(3,387)

CASH FLOWS FROM FINANCING ACTIVITIES






Proceeds from exercise of stock options


1,036



83

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


(362)



-

Repurchases of common stock


(116)



(1,194)

Net cash provided by (used in) financing activities


558



(1,111)







Net change in cash and cash equivalents


26,169



10,022

Effect of exchange rates on cash


49



(224)

Cash and cash equivalents at beginning of year


86,542



41,161

Cash and cash equivalents at end of the period

$

112,760


$

50,959







SUPPLEMENTAL DISCLOSURE






Cash paid for income taxes

$

395


$

1,340

 

 

NON-GAAP ADJUSTED EBITDA RECONCILIATION – PRO FORMA






Three Months Ended

March 31,





2014


2013

Pro Forma





(in thousands)

Net income




$

4,353


$

659

Income tax expense





3,850



805

Depreciation and amortization





5,515



2,414

EBITDA





13,718



3,878

Merger and restructuring costs                              





285



761

Stock-based compensation





2,403



988

Adjusted EBITDA




$

16,406


$

5,627

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