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Grubhub (GRUB) Q2 Earnings Miss Estimates, Revenues Up Y/Y

Zacks Equity Research

Grubhub GRUB reported second-quarter 2019 earnings of 27 cents per share, which missed the Zacks Consensus Estimate by 3 cents. However, the bottom line plunged 46% on a year-over-year basis.

The decline can be attributed to higher investments in marketing and advertisements that fully offset strong top-line growth.

Revenues surged 35.6% year over year to $325.1 million, which beat the consensus mark of $318 million.

Total costs & expenses jumped 55.3% year over year to $318.9 million. Operations & support, sales & marketing, technology, and general & administrative expenses increased 58.5%, 60.3%, 57.1% and 41.8%, respectively.

Revenues per order less operations and support costs were $3.66, up from $3.46 in the previous quarter.
 

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Grubhub Inc. Price

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Adjusted EBITDA decreased 18.8% from the year-ago quarter to $54.7 million. Adjusted EBITDA per order was $1.23, up from $1.09 in the previous quarter.

Gross Food Sales & Active Diners Increase

Gross food sales rallied 20% year over year to $1.5 billion. Average order size increased 3.5% to about $33.

Active Diners were 20.3 million, up 30% year over year. Sequentially, the company added 1 million net active diners.

Daily Average Grubs (DAGs) were 488,900, up 16% year over year. Sequentially, DAGs declined 6%.

Orders delivered on behalf of restaurant partners accounted for nearly 35% of Grubhub’s DAGs in the reported quarter.

Since April, number of partnered restaurants increased more than 10,000 to 125,000 in the Grubhub marketplace. Further, more than 35,000 enterprise restaurant locations are now live on the marketplace.

Moreover, during the reported quarter, the company added hundreds of new independent restaurants in New York City alone, which reflects growing adoption of its platform in this niche market.

During the reported quarter, Grubhub expanded coverage with brands like KFC, Duncan, Popeyes, Red Lobster, Bob Evans, Jack in the Box, Jersey Mike's, Doghouse, BJ's and The Halal Guys.

Guidance

For third-quarter 2019, GrubHub forecasts revenues between $320 million and $340 million. Adjusted EBITDA is anticipated to be $53-$60 million.

The company expects a sequential decline of DAGs in the third quarter and a strong rebound in the fourth.

Moreover, adjusted EBITDA per order is anticipated to be more than $1.50 in the fourth quarter of 2019 due to increased efficiency in the delivery markets.

For 2019, GrubHub revised revenue guidance, which is now expected between $1.340 billion and $1.390 billion compared with the previous guidance of $1.315-$1.415 billion. Adjusted EBITDA is expected to be $235-$250 million compared with the previous guidance of $235-$265 million.
 
Zacks Rank & Stocks to Consider

GrubHub currently has a Zacks Rank #3 (Hold).

Digital Turbine APPS, Amtech Systems ASYS and Cisco Systems CSCO are some better-ranked stocks in the broader computer and technology sector. All three stocks have a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Digital Turbine, Amtech Systems and Cisco Systems are expected to report quarterly results on Aug 5, 8 and 14, respectively.

 

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