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Grubhub Reports Fourth Quarter And Full Year 2019 Results

February 6, 2020 GMT
Grubhub logo (PRNewsfoto/Grubhub)
Grubhub logo (PRNewsfoto/Grubhub)

CHICAGO, Feb. 5, 2020 /PRNewswire/ -- Grubhub Inc. (NYSE: GRUB), a leading online and mobile food-ordering and delivery marketplace, today announced financial results for the fourth quarter and full year ended December 31, 2019 and also posted a letter to shareholders on its investor relations website. For the fourth quarter, the Company reported revenues of $341 million, which is a 19% year-over-year increase from $288 million in the same period last year. Gross Food Sales grew 13% year-over-year to $1.6 billion, up from $1.4 billion in the fourth quarter of 2018.

“We strengthened both sides of our marketplace during the fourth quarter, adding 1.4 million active diners and more than doubling our restaurant selection from just a quarter ago,” said Matt Maloney, Grubhub founder and CEO. “We are making good progress on the key initiatives we outlined last quarter. We added more than 15,000 partnered and over 150,000 non-partnered restaurant options for our diners and we also launched a number of new loyalty programs for our restaurant partners.”

Fourth Quarter and Full Year 2019 Highlights
The following results reflect the financial performance and key operating metrics of our business for the three and twelve months ended December 31, 2019, as compared to the same periods in 2018.

Fourth Quarter Financial Highlights

Fourth Quarter Key Business Metrics Highlights1

____________________

1 Key Business Metrics are defined on page 29 of our Annual Report on Form 10-K filed on February 28, 2019.

Full Year Financial Highlights

Full Year Key Business Metrics Highlights1

“We continue to innovate the online takeout industry with our recent launch of Grubhub Ultimate, a revolutionary, first-of-its-kind proprietary hardware and software solution that integrates all restaurant ordering channels into one system. Grubhub Ultimate is an important step in helping unlock the pickup market, which accounts for the majority of the more than $250 billion takeout industry,” said Adam DeWitt, Grubhub president and CFO. “We remain confident our overall strategy will deliver sustainable value for all of our stakeholders and the team is determined to continue to execute and build on the early wins.”

First Quarter and Full Year 2020 Guidance
Based on information available as of February 5, 2020, the Company is providing the following financial guidance for the first quarter and full year of 2020.



First Quarter 2020


Full Year 2020




(in millions)


Expected Revenue


$350 - $370


$1,400 - $1,500


Expected Adjusted EBITDA


$15 - $25


at least $100


Fourth Quarter 2019 Financial Results Conference Call
Grubhub will webcast a conference call tomorrow at 8:00 a.m. CT to discuss the fourth quarter 2019 financial results. The webcast can be accessed on the Grubhub Investor Relations website at https://investors.grubhub.com, along with the Company’s letter to shareholders, earnings press release and financial tables. A replay of the webcast will be available at the same website.

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 more than 22 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 more than 155,000 of these restaurants in over 3,200 U.S. cities and London. The Grubhub portfolio of brands includes Grubhub, Seamless, LevelUp, 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 including its acquisitions. 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 including, but not limited to, achievement of the benefits of our planned additional investments, 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, 2019 and our most recent Quarterly Report on Form 10-Q for the quarter ended September 30, 2019, which are on file with the SEC and are available on the Investor Relations section of our website at https://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 December 31, 2019, 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, net interest 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 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 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 “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
December 31,



Year Ended
December 31,



2019



2018



2019



2018


Revenues

$

341,270



$

287,721



$

1,312,151



$

1,007,257


Costs and expenses:
















Operations and support


190,328




144,082




675,471




454,321


Sales and marketing


86,100




69,877




310,299




214,290


Technology (exclusive of amortization)


29,164




24,972




115,297




82,278


General and administrative


28,018




27,393




101,918




85,465


Depreciation and amortization


32,488




24,153




115,449




85,940


Total costs and expenses


366,098




290,477




1,318,434




922,294


Income (loss) from operations


(24,828)




(2,756)




(6,283)




84,963


Interest expense - net


6,189




2,163




20,493




3,530


Income (loss) before provision for income taxes


(31,017)




(4,919)




(26,776)




81,433


Income tax (benefit) expense


(3,299)




231




(8,210)




2,952


Net income (loss) attributable to common stockholders

$

(27,718)



$

(5,150)



$

(18,566)



$

78,481


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
















Basic

$

(0.30)



$

(0.06)



$

(0.20)



$

0.88


Diluted

$

(0.30)



$

(0.06)



$

(0.20)



$

0.85


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
















Basic


91,509




90,705




91,247




89,447


Diluted


91,509




90,705




91,247




92,354




KEY BUSINESS METRICS



Three Months Ended
December 31,



Year Ended
December 31,



2019



2018



2019



2018


Active Diners (000s)


22,621




17,688




22,621




17,688


Daily Average Grubs


502,600




467,500




492,300




435,900


Gross Food Sales (millions)

$

1,552



$

1,377



$

5,914



$

5,057


GRUBHUB INC.


CONSOLIDATED BALANCE SHEETS


(in thousands, except share data)



























December 31,
2019



December 31,
2018


ASSETS








CURRENT ASSETS:








Cash and cash equivalents

$

375,909



$

211,245


Short-term investments


49,275




14,084


Accounts receivable, less allowances for doubtful accounts


119,658




110,855


Income tax receivable


3,960




9,949


Prepaid expenses and other current assets


17,515




17,642


Total current assets


566,317




363,775


PROPERTY AND EQUIPMENT:








Property and equipment, net of depreciation and amortization


172,744




119,495


OTHER ASSETS:








Other assets


26,836




14,186


Operating lease right-of-use asset


100,632





Goodwill


1,007,968




1,019,239


Acquired intangible assets, net of amortization


500,481




549,013


Total other assets


1,635,917




1,582,438


TOTAL ASSETS

$

2,374,978



$

2,065,708


LIABILITIES AND STOCKHOLDERS' EQUITY








CURRENT LIABILITIES:








Restaurant food liability

$

131,753



$

127,344


Accounts payable


26,748




26,656


Accrued payroll


19,982




18,173


Current portion of long-term debt





6,250


Current operating lease liability


9,376





Other accruals


61,504




44,745


Total current liabilities


249,363




223,168


LONG-TERM LIABILITIES:








Deferred taxes, non-current


27,163




46,383


Noncurrent operating lease liability


111,056





Long-term debt


493,009




335,548


Other accruals


817




18,270


Total long-term liabilities


632,045




400,201


STOCKHOLDERS' EQUITY:








Common stock, $0.0001 par value


9




9


Accumulated other comprehensive loss


(1,628)




(1,891)


Additional paid-in capital


1,164,400




1,094,866


Retained earnings


330,789




349,355


Total Stockholders' Equity

$

1,493,570



$

1,442,339


TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

2,374,978



$

2,065,708


GRUBHUB INC.


CONSOLIDATED STATEMENTS OF CASH FLOWS


(in thousands)













Year Ended December 31,




2019



2018


CASH FLOWS FROM OPERATING ACTIVITIES









Net income (loss)


$

(18,566)



$

78,481


Adjustments to reconcile net income (loss) to net cash from operating activities:









Depreciation



30,237




21,647


Amortization of intangible assets and developed software



85,212




64,293


Stock-based compensation



72,879




55,261


Deferred taxes



(7,726)




1,724


Other



8,531




5,552


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









Accounts receivable



(11,591)




(6,092)


Income taxes receivable



5,989




(1,356)


Prepaid expenses and other assets



(13,854)




(16,270)


Restaurant food liability



4,380




2,921


Accounts payable



1,978




11,160


Accrued payroll



1,804




3,621


Other accruals



23,349




4,585


Net cash provided by operating activities



182,622




225,527


CASH FLOWS FROM INVESTING ACTIVITIES









Purchases of investments



(85,989)




(57,197)


Proceeds from maturity of investments



51,366




67,166


Capitalized website and development costs



(48,524)




(31,180)


Purchases of property and equipment



(55,167)




(43,033)


Acquisition of other intangible assets



(9,980)




(11,851)


Acquisitions of businesses, net of cash acquired



127




(517,909)


Other cash flows from investing activities



(250)





Net cash used in investing activities



(148,417)




(594,004)


CASH FLOWS FROM FINANCING ACTIVITIES









Proceeds from the issuance of long-term debt



500,000




222,000


Repayments of borrowings under the credit facility



(342,313)




(53,906)


Proceeds from the issuance of common stock






200,000


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



(23,753)




(35,599)


Proceeds from exercise of stock options



4,469




14,190


Payments for debt issuance costs



(9,136)





Net cash provided by financing activities



129,267




346,685


Net change in cash, cash equivalents, and restricted cash



163,472




(21,792)


Effect of exchange rates on cash, cash equivalents and restricted cash



320




(645)


Cash, cash equivalents, and restricted cash at beginning of year



215,802




238,239


Cash, cash equivalents, and restricted cash at end of the period


$

379,594



$

215,802


SUPPLEMENTAL DISCLOSURE OF NON-CASH ITEMS









Cash paid for income taxes


$

1,163



$

7,895


GRUBHUB INC.

NON-GAAP FINANCIAL MEASURES RECONCILIATION

(in thousands, except per share and per order data)




Three Months Ended
December 31,



Year Ended
December 31,




2019



2018



2019



2018


Net income (loss)


$

(27,718)



$

(5,150)



$

(18,566)



$

78,481


Income taxes



(3,299)




231




(8,210)




2,952


Interest expense - net



6,189




2,163




20,493




3,530


Depreciation and amortization



32,488




24,153




115,449




85,940


EBITDA



7,660




21,397




109,166




170,903


Acquisition, restructuring and legal costs



966




1,913




4,105




7,578


Stock-based compensation2



18,073




18,816




72,879




55,261


Adjusted EBITDA


$

26,699



$

42,126



$

186,150



$

233,742



















Net income (loss) per order


$

(0.60)



$

(0.12)



$

(0.10)



$

0.49


Adjusted EBITDA per order


$

0.58



$

0.98



$

1.04



$

1.47






Three Months Ended
December 31,



Year Ended
December 31,




2019



2018



2019



2018


Net income (loss)


$

(27,718)



$

(5,150)



$

(18,566)



$

78,481


Stock-based compensation2



18,073




18,816




72,879




55,261


Amortization of acquired intangible assets



13,367




11,377




50,712




42,484


Acquisition, restructuring and legal costs



966




1,913




4,105




7,578


Income tax adjustments



(8,916)




(9,384)




(35,883)




(30,544)


Non-GAAP net income (loss)


$

(4,228)



$

17,572



$

73,247



$

153,260


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



91,509




93,144




92,759




92,354


Non-GAAP net income (loss) per diluted share attributable to common stockholders


$

(0.05)



$

0.19



$

0.79



$

1.66



2 Stock-based compensation expense for the three months ended December 31, 2018 and the twelve months ended December 31, 2019 and 2018 included $4.8 million, $1.6 million and $4.8 million, respectively, of expense related to the accelerated vesting of equity awards to certain terminated acquired employees.



Guidance




Three Months Ended

March 31, 2020




Low



High




(in millions)


Net loss


$

(36.0)



$

(28.5)


Income taxes



(12.1)




(9.6)


Interest expense - net



6.1




6.1


Depreciation and amortization



34.0




34.0


EBITDA



(8.0)




2.0


Acquisition, restructuring and legal costs







Stock-based compensation



23.0




23.0


Adjusted EBITDA


$

15.0



$

25.0



Note: For the full year 2020, we currently expect Adjusted EBITDA of at least $100 million, net interest expense of $25 million, depreciation and amortization expense of $145 million and stock-based compensation expense of $100 million.

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SOURCE Grubhub Inc.