News Column

GrubHub, fresh off IPO, beats 2Q revenue expectations

July 24, 2014

By Jessica Wohl, Chicago Tribune



July 24--GrubHub Inc. reported higher than expected second-quarter revenue on Thursday, though profit at the newly public company came in below analysts' expectations as it spends on hiring and advertising.

Shares of the Chicago-based online food ordering company were up 5.1 percent at $35.23 on Thursday afternoon after rising higher earlier in the session. GrubHub shares soared as high as $40.80 during their April 5 debut on the New York Stock Exchange, after pricing at $26 per share.

GrubHub said its number of "active diners," or accounts from which an order has been placed in the past year, jumped 51 percent to 4.19 million from a year earlier.

The company, which is trying to raise awareness of its service, decided to spend more on advertising in the second quarter after seeing good results from television commercials in the first quarter, Chief Executive Officer Matt Maloney said during a conference call. It is also hiring more engineers, some of whom are interested in joining the company now that it is public, Maloney said.

GrubHub's IPO followed the company's merger with New York-based rival Seamless in August 2013.

"It probably originally started with the merger, kind of getting our name out there a little bit more, and then it built as we filed to go public and then, ultimately, with a successful public offering and having that risk behind us, I think that it has even turned on a little bit more," Maloney said in a phone interview. "They like hard problems to solve in a fun, entrepreneurial, empowered environment and that's what we give."

GrubHub said it is working to beef up its technology staff for efforts to improve its systems behind the scenes and in ways that diners place their orders. For example, the company is investing in mobile technology as more people place their food orders on their mobile phones. Mobile ordering accounted for 48 percent of orders in the second quarter, up from 44 percent in the first quarter of this year and 39 percent in the second quarter of 2013.

GrubHub reported sales of $60 million and earned $2.7 million, or 3 cents per share, for the quarter that ended on June 30. The four analysts who track the stock were, on average, looking for $54.68 million in sales and a profit of 7 cents per share. In May, GrubHub had forecast sales of $53 million to $55 million.

GrubHub said that it expects third-quarter revenue in the range of $55.5 million to $57.5 million. It forecast adjusted earnings, which exclude certain factors, of $13 million to $15 million for the third quarter. Adjusted earnings in the second quarter came in at $16.9 million, ahead of the company's forecast of $13 million to $15 million.

Tribune reporter Corilyn Shropshire contributed.

jwohl@tribune.com

Follow @JessicaWohl Follow @chibreakingbiz

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Source: Chicago Tribune (IL)


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