grub-ex991

grub-ex991_6.htm

Exhibit 99.1

GRUBHUB REPORTS RECORD FOURTH QUARTER RESULTS

Grubhub generates 49% revenue growth in the fourth quarter

CHICAGO, Feb 8, 2018 – Grubhub Inc. (NYSE: GRUB), the nation’s leading takeout marketplace, today announced financial results for the fourth quarter ended Dec. 31, 2017. For the fourth quarter, the Company posted revenues of $205.1 million, which is a 49% year-over-year increase from $137.5 million in the fourth quarter of 2016. Gross Food Sales grew 39% year-over-year to $1.1 billion, up from $818 million in the year ago period.

“Over the past two years we have taken incredible strides in expanding the breadth and depth of our restaurant network, growing the number of local restaurants we work with from 40,000 to over 80,000 today,” said Grubhub CEO, Matt Maloney. “The partnership with Yum! which we announced this morning will accelerate the expansion of our delivery network and amplify our diner acquisition efforts, raising consumer awareness of online ordering and driving more volume for all restaurants across our platform.”

Fourth Quarter and Full Year 2017 Highlights

The following results reflect the financial performance and key operating metrics of our business for the three and twelve months ended Dec. 31, 2017, as compared to the same periods in 2016.

Fourth Quarter Financial Highlights

•

Revenues: $205.1 million, a 49% year-over-year increase from $137.5 million in the fourth quarter of 2016.

•

Net Income: $53.5 million, or $0.60 per diluted share, a 293% year-over-year increase from $13.6 million, or $0.16 per diluted share, in the fourth quarter of 2016.

•

Non-GAAP Adjusted EBITDA: $57.0 million, a 45% year-over-year increase from $39.2 million in the fourth quarter of 2016.

•

Non-GAAP Net Income: $33.3 million, or $0.37 per diluted share, a 68% year-over-year increase from $19.8 million, or $0.23 per diluted share, in the fourth quarter of 2016.

Fourth Quarter Key Business Metrics Highlights

•

Active Diners were 14.5 million, a 77% year-over-year increase from 8.2 million Active Diners in the fourth quarter of 2016.

•

Daily Average Grubs (DAGs) were 392,500, a 34% year-over-year increase from 292,500 DAGs in the fourth quarter of 2016.

•

Gross Food Sales were $1.1 billion, a 39% year-over-year increase from $818 million in the fourth quarter of 2016.

Full Year Financial Highlights

•

Revenues: $683.1 million, a 38% year-over-year increase from $493.3 million in 2016.

•

Net Income: $99.0 million, or $1.12 per diluted share, a 100% year-over-year increase from $49.6 million, or $0.58 per diluted share, in 2016.

•

Non-GAAP Adjusted EBITDA: $184.0 million, a 27% year-over-year increase from $144.6 million in 2016.

•

Non-GAAP Net Income: $106.1 million, or $1.20 per diluted share, a 39% year-over-year increase from $76.6 million, or $0.89 per diluted share, in 2016.

Full Year Key Business Metrics Highlights

•

Active Diners were 14.5 million, a 77% year-over-year increase from 8.2 million Active Diners in 2016.

•

Daily Average Grubs (DAGs) were 334,000, a 22% year-over-year increase from 274,800 DAGs in 2016.

•

Gross Food Sales were $3.8 billion, a 26% year-over-year increase from $3.0 billion in 2016.

“Grubhub delivery has helped drive phenomenal growth for us, reaching an annualized run rate of over $1 billion dollars in GFS from close to zero in 2015,” commented Grubhub President and CFO Adam DeWitt. “Our ability to scale delivery capabilities efficiently, combined with consistent execution on organic diner acquisition and merger integrations, enabled us to generate record EBITDA per order of $1.58 in the fourth quarter.”

First Quarter and Full Year 2018 Guidance

Based on information available as of Feb. 8, 2018, the Company is providing the following financial guidance for the first quarter and full year of 2018:

	First Quarter 2018	Full Year 2018
	(in millions)
Expected Revenue range	$224 - $232	$910 - $960
Expected Adjusted EBITDA range	$54 - $60	$225 - $255

Fourth Quarter 2017 Financial Results Conference Call

Grubhub will webcast a conference call today at 9 a.m. CT to discuss the fourth quarter 2017 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. A replay of the webcast will be available at the same website until Feb. 22, 2018.

About Grubhub

Grubhub (NYSE: GRUB) is the nation’s leading online and mobile takeout food-ordering marketplace with the most comprehensive network of restaurant partners and largest active diner base. Dedicated to moving eating forward and connecting diners with the food they love from their favorite local restaurants, the Company's platforms and services strive to elevate food ordering through innovative restaurant technology, easy-to-use platforms and an improved delivery experience. Grubhub is proud to work with over 80,000 restaurant partners in over 1,600 U.S. cities and London. The Grubhub portfolio of brands includes Grubhub, Seamless, Eat24, 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 following the acquisition of Eat24 and its commercial agreements with Yelp and Yum! Brands. 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 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, 2017 and our most recent Quarterly Report on Form 10-Q for the quarter ended Sep. 30, 2017, which are on file with the SEC and are available on the Investor Relations section of our website at http://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 Dec. 31, 2017, 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, interest income and 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, the impact of the U.S. Tax Cuts and Jobs Act (“U.S. Tax Act”) 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 and restructuring, 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 “Schedule of 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.

Contacts:

Dave Zaragoza

Corporate Finance & Investor Relations

ir@grubhub.com

Katie Norris

Press

press@grubhub.com

GRUBHUB INC.

STATEMENTS OF OPERATIONS

(in thousands, except per share data)

	Three Months Ended December 31,						Year Ended December 31,
	2017			2016			2017			2016
Revenues	$	205,080		$	137,457		$	683,067		$	493,331
Costs and expenses:
Operations and support		81,658			51,727			269,453			171,756
Sales and marketing		45,384			29,636			150,730			110,323
Technology (exclusive of amortization)		14,703			10,689			56,263			42,454
General and administrative		18,396			12,435			65,023			50,482
Depreciation and amortization		18,781			9,911			51,848			35,193
Total costs and expenses		178,922			114,398			593,317			410,208
Income from operations		26,158			23,059			89,750			83,123
Interest (income) expense - net		1,010			(183	)		102			(729	)
Income before provision for income taxes		25,148			23,242			89,648			83,852
Income tax (benefit) expense		(28,378	)		9,605			(9,335	)		34,295
Net income attributable to common stockholders	$	53,526		$	13,637		$	98,983		$	49,557
Net income per share attributable to common stockholders:
Basic	$	0.62		$	0.16		$	1.15		$	0.58
Diluted	$	0.60		$	0.16		$	1.12		$	0.58
Weighted-average shares used to compute net income per share attributable to common stockholders:
Basic		86,702			85,608			86,297			85,069
Diluted		89,366			86,666			88,182			86,135

KEY OPERATING METRICS

	Three Months Ended December 31,				Year Ended December 31,
	2017		2016		2017		2016
Active Diners (000s)		14,462		8,174		14,462		8,174
Daily Average Grubs		392,500		292,500		334,000		274,800
Gross Food Sales (millions)	$	1,138.6	$	817.7	$	3,783.7	$	2,998.1

GRUBHUB INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)



	December 31, 2017			December 31, 2016
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	234,090		$	239,528
Short-term investments		23,605			84,091
Accounts receivable, less allowances for doubtful accounts		95,970			60,550
Prepaid expenses and other current assets		6,818			12,168
Total current assets		360,483			396,337
PROPERTY AND EQUIPMENT:
Property and equipment, net of depreciation and amortization		71,384			46,555
OTHER ASSETS:
Other assets		6,487			4,530
Goodwill		589,862			436,455
Acquired intangible assets, net of amortization		515,553			313,630
Total other assets		1,111,902			754,615
TOTAL ASSETS	$	1,543,769		$	1,197,507
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Restaurant food liability	$	119,922		$	83,349
Accounts payable		7,607			7,590
Accrued payroll		13,186			7,338
Taxes payable		3,109			865
Short-term debt		3,906			—
Other accruals		26,818			11,348
Total current liabilities		174,548			110,490
LONG-TERM LIABILITIES:
Deferred taxes, non-current		74,292			108,022
Other accruals		7,468			6,876
Long-term debt		169,645			—
Total long-term liabilities		251,405			114,898
STOCKHOLDERS’ EQUITY:
Common stock, $0.0001 par value		9			9
Accumulated other comprehensive loss		(1,228	)		(2,078	)
Additional paid-in capital		849,043			805,731
Retained earnings		269,992			168,457
Total Stockholders’ Equity	$	1,117,816		$	972,119
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	1,543,769		$	1,197,507

GRUBHUB INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

	Year Ended December 31,
	2017			2016
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	98,983		$	49,557
Adjustments to reconcile net income to net cash from operating activities:
Depreciation		11,775			8,921
Provision for doubtful accounts		1,424			1,102
Deferred taxes		(31,179	)		1,027
Amortization of intangible assets		40,073			26,272
Stock-based compensation		32,748			23,559
Deferred rent		849			1,286
Amortization of deferred loan costs		487			365
Investment premium amortization		(739	)		(612	)
Other		436			(159	)
Change in assets and liabilities, net of the effects of business acquisitions:
Accounts receivable		(27,833	)		(17,488	)
Prepaid expenses and other assets		4,112			(8,765	)
Restaurant food liability		8,576			16,451
Accounts payable		(4,244	)		(3,204	)
Accrued payroll		5,537			1,819
Other accruals		11,735			(2,453	)
Net cash provided by operating activities		152,740			97,678
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of investments		(154,758	)		(226,694	)
Proceeds from maturity of investments		215,983			284,662
Capitalized website and development costs		(21,325	)		(12,809	)
Purchases of property and equipment		(18,971	)		(24,087	)
Acquisitions of businesses, net of cash acquired		(333,301	)		(65,849	)
Acquisition of other intangible assets		(25,147	)		(250	)
Other cash flows from investing activities		557			(492	)
Net cash used in investing activities		(336,962	)		(45,519	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings under the credit facility		200,000			—
Repayments of borrowings under the credit facility		(25,781	)		—
Repurchases of common stock		—			(14,774	)
Proceeds from exercise of stock options		16,375			13,468
Excess tax benefits related to stock-based compensation		—			24,906
Taxes paid related to net settlement of stock-based compensation awards		(10,556	)		(2,779	)
Payments for debt issuance costs		(1,979	)		(1,477	)
Net cash provided by financing activities		178,059			19,344
Net change in cash and cash equivalents		(6,163	)		71,503
Effect of exchange rates on cash		725			(1,268	)
Cash and cash equivalents at beginning of year		239,528			169,293
Cash and cash equivalents at end of the period	$	234,090		$	239,528
SUPPLEMENTAL DISCLOSURE OF NON CASH ITEMS
Cash paid for income taxes	$	19,148		$	8,722

GRUBHUB INC.

NON-GAAP FINANCIAL MEASURES RECONCILIATION

(in thousands, except per share data)

	Three Months Ended December 31,					Year Ended December 31,
	2017			2016		2017			2016
Net income	$	53,526		$	13,637	$	98,983		$	49,557
Income taxes		(28,378	)		9,605		(9,335	)		34,295
Interest (income) expense - net_(a)		1,010			—		102			—
Depreciation and amortization		18,781			9,911		51,848			35,193
EBITDA		44,939			33,153		141,598			119,045
Acquisition, restructuring and legal costs		3,199			253		9,642			2,042
Stock-based compensation		8,835			5,804		32,748			23,559
Adjusted EBITDA	$	56,973		$	39,210	$	183,988		$	144,646

(a)

Due to interest incurred on borrowings under the Company’s credit facility during the three months ended December 31, 2017, the Company has updated its calculation of Adjusted EBITDA to include net interest expense. The Company did not recast periods prior to 2017 due to the insignificance of net interest (income) expense in those periods. Recast Adjusted EBITDA for the three months ended March 31, 2017, June 30, 2017 and September 30, 2017 includes net interest income of $0.2 million, $0.3 million and $0.4 million, respectively. There were no changes to the Company’s GAAP results as a result of this change in presentation.

	Three Months Ended December 31,						Year Ended December 31,
	2017			2016			2017			2016
Net income	$	53,526		$	13,637		$	98,983		$	49,557
Stock-based compensation		8,835			5,804			32,748			23,559
Amortization of acquired intangible assets		11,238			4,801			28,066			20,871
Acquisition, restructuring and legal costs		3,199			253			9,642			2,042
Income tax benefit of the U.S. Tax Act		(34,054	)		—			(34,054	)		—
Income tax adjustments		(9,469	)		(4,692	)		(29,239	)		(19,472	)
Non-GAAP net income	$	33,275		$	19,803		$	106,146		$	76,557
Weighted-average diluted shares used to compute net income per share attributable to common stockholders		89,366			86,666			88,182			86,135
Non-GAAP net income per diluted share attributable to common stockholders	$	0.37		$	0.23		$	1.20		$	0.89

	Guidance
	Three Months Ended March 31, 2018				Year Ended December 31, 2018
	Low		High		Low		High
	(in millions)
Net income	$	16.2	$	20.5	$	65.6	$	87.2
Income taxes		6.3		8.0		25.4		33.8
Interest expense ̶ net		1.0		1.0		4.0		4.0
Depreciation and amortization		20.0		20.0		82.0		82.0
EBITDA		43.5		49.5		177.0		207.0
Acquisition and restructuring costs		—		—		—		—
Stock-based compensation		10.5		10.5		48.0		48.0
Adjusted EBITDA	$	54.0	$	60.0	$	225.0	$	255.0