Grubhub Reports Third Quarter 2020 Results

Rhea-AI Summary

Grubhub Inc. (NYSE: GRUB) reported third-quarter 2020 revenues of $494 million, marking a 53% year-over-year increase from $322 million. Gross Food Sales soared 68% to $2.4 billion, up from $1.4 billion. Active Diners reached 30 million, a 41% year-over-year increase. However, the company reported a net loss of $9.2 million compared to a net income of $1 million in Q3 2019. Non-GAAP Adjusted EBITDA fell 19% to $43.8 million. The acquisition by Just Eat Takeaway.com is expected to complete in the first half of 2021.

Positive

• Revenue increase of 53% year-over-year to $494 million.
• Gross Food Sales growth of 68% year-over-year to $2.4 billion.
• Active Diners rose to 30 million, a 41% year-over-year increase.
• Daily Average Grubs increased by 46% year-over-year.

Negative

• Net loss of $9.2 million compared to a net income of $1 million in Q3 2019.
• Non-GAAP Adjusted EBITDA decreased by 19% to $43.8 million.
• Non-GAAP Net Income dropped to $15.2 million from $24.7 million in Q3 2019.

CHICAGO, Oct. 28, 2020 /PRNewswire/ -- Grubhub Inc. (NYSE: GRUB), a leading online and mobile food-ordering and delivery marketplace, today announced financial results for the third quarter ended September 30, 2020 and also posted a letter to shareholders on its investor relations website. The Company reported revenues of $494 million, which is a 53% year-over-year increase from $322 million in the same period last year. Gross Food Sales grew 68% year-over-year to $2.4 billion, up from $1.4 billion in the same period last year.

"Connecting restaurants and diners is more important than ever given the challenges our restaurant partners still face because of the pandemic. Since March, we have supported our restaurant partners with hundreds of millions of dollars through increased marketing support, reduced commissions, and bonuses and personal protective equipment for drivers," said Matt Maloney, Grubhub founder and CEO. "Earlier this month, the Just Eat Takeaway.com shareholders overwhelmingly voted in favor of the proposed acquisition of Grubhub, which is on track for completion in the first half of 2021."

Third Quarter 2020 Highlights
The following results reflect the financial performance and key operating metrics of our business for the three months ended September 30, 2020, as compared to the same period in 2019.

Third Quarter Financial Highlights

• Revenues: $494.0 million, a 53% year-over-year increase from $322.1 million in the third quarter of 2019.
• Net Income (Loss): $(9.2) million, or $(0.10) per diluted share, a decrease from $1.0 million, or $0.01 per diluted share, in the third quarter of 2019.
• Non-GAAP Adjusted EBITDA: $43.8 million, a 19% year-over-year decrease from $53.8 million in the third quarter of 2019.
• Non-GAAP Net Income: $15.2 million, or $0.16 per diluted share, a decrease from $24.7 million, or $0.27 per diluted share, in the third quarter of 2019.

Third Quarter Key Business Metrics Highlights¹

• Active Diners: 30.0 million, a 41% year-over-year increase from 21.2 million Active Diners in the third quarter of 2019.
• Daily Average Grubs (DAGs): 668,600, a 46% year-over-year increase from 457,300 DAGs in the third quarter of 2019.
• Gross Food Sales: $2.4 billion, a 68% year-over-year increase from $1.4 billion in the third quarter of 2019.

________________________
¹ Key Business Metrics are defined on pages 28 - 29 of our Annual Report on Form 10-K filed on February 28, 2020. 

"Diner and order growth further accelerated in the third quarter as consumers across the country increasingly embraced the control, ease and convenience of ordering through Grubhub," said Adam DeWitt, Grubhub president and CFO. "We continued to invest aggressively in new diner acquisition and support for our restaurant partners while also generating our highest Adjusted EBITDA per order in a year. This quarter again showcased the strength and sustainability of our business and ability to drive results for our restaurant partners in this challenging time."

Guidance
Given Grubhub's pending acquisition by Just Eat Takeaway.com, it is no longer issuing forward-looking guidance.

About Grubhub
Grubhub (NYSE: GRUB) is a leading online and mobile food-ordering and delivery marketplace with the largest and most comprehensive network of restaurant partners, as well as nearly 30 million active diners. Dedicated to connecting diners with the food they love from their favorite local restaurants, Grubhub elevates food ordering through innovative restaurant technology, easy-to-use platforms and an improved delivery experience. Grubhub features over 300,000 restaurants and is proud to partner with approximately 245,000 of these restaurants in over 4,000 U.S. cities. The Grubhub portfolio of brands includes Grubhub, Seamless, LevelUp, AllMenus and MenuPages.

Use of Forward-Looking Statements
This communication contains "forward-looking statements" regarding Grubhub, Just Eat Takeaway.com or their respective management's future expectations, beliefs, intentions, goals, strategies, plans and prospects, which, in the case of Grubhub, are made in reliance on the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve substantial risks, known and unknown, uncertainties, assumptions and other factors that may cause actual results, performance or achievements to differ materially from future results expressed or implied by such forward-looking statements including, but not limited to, the occurrence of any event, change or other circumstances that could give rise to the right of one or both of Grubhub or Just Eat Takeaway.com to terminate the merger agreement; the ability to obtain approval by Grubhub stockholders on the expected schedule or at all; difficulties and delays in integrating Grubhub's and Just Eat Takeaway.com's businesses; risks that the proposed merger disrupts Grubhub's or Just Eat Takeaway.com's current plans and operations; failing to fully realize anticipated synergies, cost savings and other anticipated benefits of the proposed merger when expected or at all; potential adverse reactions or changes to business relationships resulting from the announcement or completion of the proposed merger; the risk that unexpected costs will be incurred; the ability of Grubhub or Just Eat Takeaway.com to retain and hire key personnel; the diversion of management's attention from ongoing business operations; uncertainty as to the value of the Just Eat Takeaway.com ordinary shares to be issued in connection with the proposed merger; uncertainty as to the long-term value of the common stock of the combined company following the proposed merger; the continued availability of capital and financing following the proposed merger; the outcome of any legal proceedings that may be instituted against Grubhub, Just Eat Takeaway.com or their respective directors and officers; changes in global, political, economic, business, competitive, market and regulatory forces; changes in tax laws, regulations, rates and policies; future business acquisitions or disposals; competitive developments; and the timing and occurrence (or non-occurrence) of other events or circumstances that may be beyond Grubhub's and Just Eat Takeaway.com's control.

These and other risks, uncertainties, assumptions and other factors may be amplified or made more uncertain by the COVID-19 pandemic, which has caused significant economic uncertainty. The extent to which the COVID-19 pandemic impacts Grubhub's and Just Eat Takeaway.com's businesses, operations and financial results, including the duration and magnitude of such effects, will depend on numerous factors, which are unpredictable, including, but not limited to, the duration and spread of the outbreak, its severity, the actions taken to contain the virus or treat its impact, and how quickly and to what extent normal economic and operating conditions can resume. Forward-looking statements generally relate to future events or Grubhub and Just Eat Takeaway.com's future financial or operating performance and include, without limitation, statements relating to the proposed merger and the potential impact of the COVID-19 outbreak on Grubhub and Just Eat Takeaway.com's business and operations. In some cases, you can identify forward-looking statements because they contain words such as "anticipates," "believes," "contemplates," "could," "seeks," "estimates," "intends," "may," "plans," "potential," "predicts," "projects," "should," "will," "would" or similar expressions and the negatives of those terms. 

While forward-looking statements are Grubhub's and Just Eat Takeaway.com's current predictions at the time they are made, you should not rely upon them. Forward-looking statements represent Grubhub's and Just Eat Takeaway.com's management's beliefs and assumptions only as of the date of this communication, unless otherwise indicated, and there is no implication that the information contained in this communication is made subsequent to such date. For additional information concerning factors that could cause actual results and outcomes to differ materially from those expressed or implied in the forward-looking statements, please refer to the cautionary statements and risk factors included in Grubhub's filings with the Securities and Exchange Commission (the "SEC"), including Grubhub's Annual Report on Form 10-K filed with the SEC on February 28, 2020, Grubhub's Quarterly Reports on Form 10-Q and any further disclosures Grubhub makes in Current Reports on Form 8-K. Grubhub's SEC filings are available electronically on Grubhub's investor website at investors.grubhub.com or the SEC's website at www.sec.gov. For additional information concerning factors that could cause future results to differ from those expressed or implied in the forward-looking statements, please refer to Just Eat Takeaway.com's non-exhaustive list of key risks and cautionary statements included in Just Eat Takeaway.com's Annual Report, which is available electronically on Just Eat Takeaway.com's investor website at www.justeattakeaway.com. Except as required by law, Grubhub and Just Eat Takeaway.com assume no obligation to update these forward-looking statements or this communication, or to update, supplement or correct the information set forth in this communication or the reasons actual results could differ materially from those anticipated in the forward-looking statements, even if new information becomes available in the future. All subsequent written and oral forward-looking statements attributable to Grubhub, Just Eat Takeaway.com or any person acting on behalf of either party are expressly qualified in their entirety by the cautionary statements referenced above.

Additional Information and Where to Find It
In connection with the proposed merger, Just Eat Takeaway.com will file with the SEC a registration statement on Form F-4 to register the shares to be issued in connection with the proposed merger. The registration statement will include a preliminary proxy statement of Grubhub/prospectus of Just Eat Takeaway.com which, when finalized, will be sent to the stockholders of Grubhub seeking their approval of the respective merger-related proposals. Also in connection with the proposed merger, Just Eat Takeaway.com will file with the Netherlands Authority for the Financial Markets ("AFM") and/or the UK Financial Conduct Authority ("FCA") a prospectus for the listing and admission to trading on Euronext Amsterdam and/or the admission to listing on the FCA's Official List and to trading on the London Stock Exchange's Main Market for listed securities of the shares to be issued in connection with the proposed merger (the "Prospectus").

INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT ON FORM F-4 AND THE RELATED PROXY STATEMENT/PROSPECTUS INCLUDED WITHIN THE REGISTRATION STATEMENT ON FORM F-4, THE PROSPECTUS, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS AND ANY OTHER RELEVANT DOCUMENTS FILED OR TO BE FILED WITH THE SEC, THE AFM AND/OR THE FCA IN CONNECTION WITH THE PROPOSED MERGER, WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT GRUBHUB, JUST EAT TAKEAWAY.COM AND THE PROPOSED MERGER.

Investors and security holders may obtain copies of these documents and any other documents filed with or furnished to the SEC by Grubhub or Just Eat Takeaway.com free of charge through the website maintained by the SEC at www.sec.gov, from Grubhub at its website, investors.grubhub.com, or from Just Eat Takeaway.com at its website www. justeattakeaway.com. The Prospectus, as well as any supplement thereto, will be made available on the website of Just Eat Takeaway.com at its website www. justeattakeaway.com.

Participants in the Solicitation
Grubhub, Just Eat Takeaway.com and their respective directors and certain of their respective executive officers and employees may be deemed to be participants in the solicitation of proxies in respect of the proposed merger under the rules of the SEC. Information about Grubhub's directors and executive officers is available in Grubhub's proxy statement dated April 9, 2020 for its 2020 Annual Meeting of Stockholders. To the extent holdings of Grubhub securities by directors or executive officers of Grubhub have changed since the amounts contained in the definitive proxy statement for Grubhub's 2020 Annual Meeting of Stockholders, such changes have been or will be reflected on Statements of Change in Ownership on Form 4 filed with the SEC. These documents are available free of charge from the sources indicated above, and from Grubhub by going to its investor relations page on its corporate website at investors.grubhub.com.  Information about Just Eat Takeaway.com's directors and executive officers and a description of their interests are set forth in Just Eat Takeaway.com's 2019 Annual Report, which may be obtained free of charge from Just Eat Takeaway.com's website, www.justeattakeaway.com. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the proxy statement/prospectus and other relevant materials to be filed with the SEC regarding the proposed merger when they become available. Investors should read the proxy statement/prospectus carefully when it becomes available before making any voting or investment decisions. You may obtain free copies of these documents from Grubhub or Just Eat Takeaway.com using the sources indicated above.

No Offer or Solicitation
This communication shall not constitute an offer to sell or the solicitation of an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended and applicable United Kingdom, Dutch and other European regulations.

Use of Non-GAAP Financial Measures
Adjusted EBITDA, non-GAAP net income (loss) and non-GAAP net income (loss) 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 (loss) adjusted to exclude merger, acquisition, restructuring and certain legal costs, income taxes, net interest expense, depreciation and amortization and stock-based compensation expense. Non-GAAP net income (loss) and non-GAAP net income (loss) per diluted share attributable to common stockholders exclude merger, 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 (loss) and non-GAAP net income (loss) 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 (loss) to Adjusted EBITDA, non-GAAP net income (loss) and non-GAAP net income (loss) per diluted share attributable to common stockholders.

GRUBHUB INC. STATEMENTS OF OPERATIONS (in thousands, except per share data)
	Three Months Ended September 30,															Nine Months Ended September 30,
	2020								2019							2020											2019
Revenues	$		493,981						$		322,053					$			1,316,243								$			970,881
Costs and expenses:
Operations and support			316,456								161,387								849,884											485,143
Sales and marketing			97,817								71,617								282,563											224,199
Technology (exclusive of amortization)			30,796								29,483								92,297											86,133
General and administrative			27,484								25,329								98,670											73,900
Depreciation and amortization			36,556								30,649								104,476											82,961
Total costs and expenses			509,109								318,465								1,427,890											952,336
Income (loss) from operations			(15,128)								3,588								(111,647)											18,545
Interest expense, net			6,979								6,025								20,175											14,304
Income (loss) before provision for income taxes			(22,107)								(2,437)								(131,822)											4,241
Income tax benefit			(12,869)								(3,447)								(43,746)											(4,911)
Net income (loss) attributable to common stockholders	$		(9,238)						$		1,010					$			(88,076)								$			9,152
Net income (loss) per share attributable to common stockholders:
Basic	$		(0.10)						$		0.01					$			(0.96)								$			0.10
Diluted	$		(0.10)						$		0.01					$			(0.96)								$			0.10
Weighted-average shares used to compute net income (loss) per share attributable to common stockholders:
Basic			92,496								91,349								92,135											91,159
Diluted			92,496								92,847								92,135											92,850

 

KEY BUSINESS METRICS
				Three Months Ended September 30,													Nine Months Ended September 30,
				2020							2019						2020							2019
Active Diners (000s)					29,956							21,197						29,956							21,197
Daily Average Grubs					668,600							457,300						610,900							488,800
Gross Food Sales (millions)				$	2,354						$	1,400					$	6,308						$	4,362

 

GRUBHUB INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
	September 30, 2020					December 31,  2019
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$		405,273			$		375,909
Short-term investments			61,497					49,275
Accounts receivable, less allowances for doubtful accounts			75,793					119,658
Income tax receivable			22,577					3,960
Prepaid expenses and other current assets			17,875					17,515
Total current assets			583,015					566,317
PROPERTY AND EQUIPMENT:
Property and equipment, net of depreciation and amortization			217,923					172,744
OTHER ASSETS:
Other assets			42,510					26,836
Operating lease right-of-use asset			95,863					100,632
Goodwill			1,007,968					1,007,968
Acquired intangible assets, net of amortization			465,041					500,481
Total other assets			1,611,382					1,635,917
TOTAL ASSETS	$		2,412,320			$		2,374,978
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Restaurant food liability	$		115,584			$		131,753
Accounts payable			16,974					26,748
Accrued payroll			33,871					19,982
Current operating lease liability			16,667					9,376
Other accruals			156,552					61,504
Total current liabilities			339,648					249,363
LONG-TERM LIABILITIES:
Deferred taxes, non-current			1,404					27,163
Noncurrent operating lease liability			106,836					111,056
Long-term debt			493,876					493,009
Other accruals			4,531					817
Total long-term liabilities			606,647					632,045
STOCKHOLDERS' EQUITY:
Common stock, $0.0001 par value			9					9
Accumulated other comprehensive loss			(1,866)					(1,628)
Additional paid-in capital			1,225,169					1,164,400
Retained earnings			242,713					330,789
Total Stockholders' Equity	$		1,466,025			$		1,493,570
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$		2,412,320			$		2,374,978

 

GRUBHUB INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
		Nine Months Ended September 30,
		2020				2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)		$	(88,076)			$	9,152
Adjustments to reconcile net income (loss) to net cash from operating activities:
Depreciation			30,089				21,665
Amortization of intangible assets and developed software			74,387				61,296
Stock-based compensation			62,060				54,806
Deferred taxes			(25,759)				(6,208)
Other			3,279				5,210
Change in assets and liabilities:
Accounts receivable			42,636				(13,335)
Income taxes receivable			(18,617)				7,722
Prepaid expenses and other assets			(10,228)				(11,955)
Restaurant food liability			(16,111)				3,247
Accounts payable			(5,371)				(50)
Accrued payroll			13,888				4,366
Other accruals			93,285				20,088
Net cash provided by operating activities			155,462				156,004
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of investments			(87,260)				(49,506)
Proceeds from maturity of investments			75,350				31,736
Capitalized website and development costs			(43,532)				(35,068)
Purchases of property and equipment			(53,232)				(42,702)
Acquisition of other intangible assets			(510)				(8,889)
Acquisitions of businesses, net of cash acquired			—				127
Other cash flows from investing activities			(525)				(250)
Net cash used in investing activities			(109,709)				(104,552)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt			175,000				500,000
Repayments of borrowings under the credit facility			(175,000)				(342,313)
Taxes paid related to net settlement of stock-based compensation awards			(23,561)				(20,503)
Proceeds from exercise of stock options			7,484				4,040
Payments for debt issuance costs			(89)				(9,136)
Other cash flows from financing activities			(1,063)				—
Net cash provided by (used in) financing activities			(17,229)				132,088
Net change in cash, cash equivalents, and restricted cash			28,524				183,540
Effect of exchange rates on cash, cash equivalents and restricted cash			(217)				(293)
Cash, cash equivalents, and restricted cash at beginning of year			379,595				215,802
Cash, cash equivalents, and restricted cash at end of the period		$	407,902			$	399,049
SUPPLEMENTAL DISCLOSURE OF NON-CASH ITEMS
Cash paid for income taxes		$	136			$	567

 

GRUBHUB INC. NON-GAAP FINANCIAL MEASURES RECONCILIATION (in thousands, except per share and per order data)
	Three Months Ended September 30,								Nine Months Ended September 30,
	2020				2019				2020				2019
Net income (loss)	$	(9,238)			$	1,010			$	(88,076)			$	9,152
Income taxes		(12,869)				(3,447)				(43,746)				(4,911)
Interest expense, net		6,979				6,025				20,175				14,304
Depreciation and amortization		36,556				30,649				104,476				82,961
EBITDA		21,428				34,237				(7,171)				101,506
Merger, acquisition, restructuring and certain legal costs		1,518				1,312				23,210				3,139
Stock-based compensation		20,839				18,279				62,060				54,806
Adjusted EBITDA	$	43,785			$	53,828			$	78,099			$	159,451
Net income (loss) per order	$	(0.15)			$	0.02			$	(0.53)			$	0.07
Adjusted EBITDA per order	$	0.71			$	1.28			$	0.47			$	1.19
	Three Months Ended September 30,								Nine Months Ended September 30,
	2020				2019				2020				2019
Net income (loss)	$	(9,238)			$	1,010			$	(88,076)			$	9,152
Stock-based compensation		20,839				18,279				62,060				54,806
Amortization of acquired intangible assets		11,268				13,575				35,440				37,345
Merger, acquisition, restructuring and certain legal costs		1,518				1,312				23,210				3,139
Income tax adjustments		(9,227)				(9,510)				(33,437)				(26,967)
Non-GAAP income (loss)	$	15,160			$	24,666			$	(803)			$	77,475
Weighted-average diluted shares used to compute income (loss) per share attributable to common stockholders		94,575				92,847				92,135				92,850
Non-GAAP income (loss) per diluted share attributable to common stockholders	$	0.16			$	0.27			$	(0.01)			$	0.83

 

 

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SOURCE Grubhub Inc.

FAQ

What were Grubhub's revenues for Q3 2020?

Grubhub reported revenues of $494 million for Q3 2020.

How did Grubhub's Active Diners change in Q3 2020?

Active Diners increased to 30 million, a 41% rise year-over-year.

What is Grubhub's gross food sales for the third quarter of 2020?

Grubhub's gross food sales were $2.4 billion in Q3 2020.

What was Grubhub's net income for Q3 2020?

Grubhub reported a net loss of $9.2 million for Q3 2020.

What acquisition is Grubhub undergoing?

Grubhub is being acquired by Just Eat Takeaway.com, expected to complete in the first half of 2021.