Grubhub (GRUB) reported first quarter sales that topped expectations as food delivery demand remained high as customers continued to largely eschew in-person dining in the first three months of the year. However, the company unexpectedly reported a loss for the quarter. Shares traded little changed after-hours.
Here were the main results from Grubhub's report Wednesday afternoon:
Q1 Revenue: $550.6 million vs. $509.3 million expected and $362.98 million Y/Y
Q1 Adjusted loss per share: 56 centsvs. earnings of 1 cent expected and breakeven Y/Y
As with other companies in the crowded food delivery space, GrubHub's results saw a boost over the course of 2020, with stay-in-place orders helping stoke demand for at-home dining. Revenue grew between 41% and 53% in each of GrubHub's past three quarters, marking the best gains for the company since 2018.
This trend extended into the first three months of the year, with revenue growing 52%. So-called active diners, or unique Grubhub user accounts, jumped 38% to 33 million, coming in well above the 31 million expected.
Profitability, however, was hit by what Grubhub called "a number of transient factors" during the quarter that increased deliver driver costs, "including short-term driver supply imbalances from surging demand, extreme winter weather in numerous parts of the country and, to a lesser degree, the issuance of Economic Impact Payments (i.e., stimulus payments) [which] caused some drivers to temporarily reduce hours in March," the company said in its shareholder letter Wednesday.
Looking ahead, however, Wall Street was bracing for a slowdown in Grubhub's sales, with vaccinated individuals eager to return to in-person dining. Bloomberg consensus estimates show Wall Street expects revenue for the second quarter to decelerate to an only 16% year-over-year increase, or the slowest rate in more than a year, as some payback from the pandemic-era boost occurs. Grubhub, for its part, has downplayed these concerns.
"Of note, our diner behavior remains strong, with new diner repeat rates and existing diner ordering frequency still well above pre-COVID levels," Grubhub said.
Plus, Grubhub is operating in an industry laden with competitors, many of which have captured greater share in the lucrative U.S. market. Data from Second Measure showed orders from Grubhub and its subsidiaries Seamless and Eat24 comprised 17% of U.S. meal delivery sales in March this year, with this proportion coming in below that of UberEats and DoorDash at 22% and 55%, respectively. DoorDash reported gross order value of $8.2 billion in the final three months of 2020, and Uber Eats last reported gross bookings of more than $10 billion over the same time period, compared to GrubHub's gross food sales of $2.4 billion at the time.
Consolidation has also been a major trend among food delivery companies in a bid to capture additional market share and serve more geographies. Grubhub's first-quarter results come ahead of the close of its merger with Dutch food delivery company Just Eat Takeaway, which announced last year that it would be acquiring Grubhub in a $7.3 billion deal. The merger is expected to be completed in the first half of 2021, the companies have said.
This post will be updated with the results of Grubhub's first quarter results after market close on Wednesday. Check back for updates.
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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