Grubhub Inc. (NYSE: GRUB) reported $1.0 billion in revenue (+47.5% year-over-year) and $5.0 billion in food sales (+34% YOY)
Take rate increased to 20.9%
The number of active users were 17 million (+22.3% YOY) which is greater than the growth of food sales (+20.9% YOY)
Market share of Grubhub was shrunk to 34% from 40% compared to the previous year
Grubhub Inc. is a web commerce platform for ordering and delivering take-out food. They listed on the New York Stock Exchange (NYSE) under ticker symbol “GRUB” in 2014 and have over 17 million active users across over 1,700 cities in the U.S.
Revenue and Income
Grubhub made an extra $1 billion in sales in 2018. Sales growth rate which had remained at around 30% soared to 47.5% in 2018. Operating profit margin, which had recorded double-digit growth in the past several years resulted in 8.1% in 2018.
Gross Food Sales (the total value of food, beverages, taxes, prepaid gratuities, and any delivery fees processed through the company’s platform) was over $5 billion in 2018 (+33.7% YOY) and have shown the continuous growth of the company.
The company has the seasonal trend to increase the sales in the fourth quarter (October to December) which includes holiday seasons. In 4Q18, the company reached record revenue, $288 million, however the profitability is declining and the company reported operating loss.
Gross Food Sales in 4Q18 was $1.3 billion, the strongest quarter in 2018. It shows the seasonal trend that sales soar in the fourth quarter, wintertime.
Grubhub also announces
Year In Food report annually, which shows the most popular dining trends of the year. In 2018, bean burritos took the top spot as the food surging the most in popularity in 2018, rising 276% as compared to 2017.
The ‘Take rate’ is another source of revenue and refers to the fees and commissions that the marketplace companies collect on sales by third-party sellers. Grubhub’s take rate is calculated by dividing Gross Food Sales by revenue. Take rate continued to rise in 2018 and marked 20.9% in 4Q which increased nearly 3pt year-over-year.
Active Diners, the number of unique diner accounts from which an order has been placed in the past twelve months, increased to 17.7million in 4Q (+22.3% YOY). This growth is larger than the growth of Gross Food Sales; $1.3 million in 4Q18 which increased by 20.9% from $1.1 million in 4Q17.
Daily Average Grubs, the number of orders placed on the platform divided by the number of days for a given period, was 467,500 in 4Q18, which increased by 19.1% from 392,500 in 4Q17. In
Year In Food, it is reported that more men ordered pickup or delivery in 2018 (59% ordered at least once a week) compared to women (36%).
Average dollar sales per order are also on the increased but the average orders per users decreased, showing a trend that users are ordering less frequently but in higher amounts. The growth of Grubhub has been driven by the increase of active diners and average sales per order.
Looking into the cost structure, operation and support expense increased by 10% year-over-year. This was primarily due to the increase of shipping cost by expanding delivery area and of payment processing fee of user’s transaction.
Balance Sheet and Cash Flow
Goodwill is an intangible asset associated with the purchase and acquisition of one company by another. The Goodwill value of Grubhub increased to $1 billion in 2018, approximately half of their total assets. This was due to the acquisitions of EAT24 ($287 million) and LevelUp ($390 million).
Cash flow from operating activities soared each year and FCF increased to $182 million.
Though the company is growing rapidly, the stock price has been staying weak. The company’s EV is $7.69 billion and EV/FCF is 42.2 as of February 20, 2019.
Grubhub once had a share of 50% of the food delivery market in the U.S., however it is declined to 34% due to the fast growth of Uber Eats and other competitors such as Door Dash and Postmates which filed for IPO recently. Grubhub has been watched how to keep its lead in the U.S. food delivery market.
Grubhub has made acquisitions as part of a growth strategy: the company completed acquisition of Tapingo, a company provides a food delivery marketplace for partnered colleges and food-service industries, for $150 million in November 2018.
In conclusion, although there is much competition entering with the growth of Uber Eats and other competitors, we believe Grub Hub should at least be in your watchlist. There are strong trends suggesting they are ready for competition and expanding their market share. The share price has been hammered down since the end of 2018 so a turnaround is possible. More consistent earnings reports like this showing increased growth should help drive the share price.
The original article was published by Stockclip, Inc. on 18/02/2019.
Starbucks Earnings Analysis: Our projections and insights on a new Chinese competitor, looking to take over
Netflix Earnings: International revenues exceed U.S. with over 139 million paid memberships worldwide
Dexcom (NASDAQ: DXCM) – A Medical Device Company Tackling Diabetes and Rewarding Shareholders Along the Way
Risk Disclaimer: The information above is of general nature only and does not take into account your objectives, financial situation or investment needs. Prior to you make an investment decision, please make sure you carefully read and fully understand our 金融服务指南, Terms and Conditions, 隐私政策 and other relevant documents that you can obtain from this website. Monex Securities Australia Pty Ltd (AFSL No. 363972; ABN 84 142 210 179) is the Financial services provider. Financial products trading carries risks and may not be suitable for all investors. You are strongly recommended to seek independent financial advice before making any investment decisions.