Grubhub beats the Street and gets ready for “drama”
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Grubhub beats the Street and gets ready for “drama”

Fast growing online food ordering service Grubhub has beaten analysts’ expectations again, delivering revenue of $232.6 million. That’s a rise of 49% from the same period in the previous year, and it beats analysts’ expectations of revenues totaling $229.3 million.

Despite this beat, it wasn’t all plain sailing: the company failed to hit targets on “daily average grubs” and missed expectations when it came to an increase in its daily average orders (they jumped by 35%, but this was not, apparently, enough for the Street!). In regards to how many people use its platform, analysts were spot on this quarter: 15.1 million.

Grubhub’s share price has risen by an incredible 42% so far this year

grubhub 080518

Source: Yahoo Finance

What was notable about this quarter? Well, for the first time, no one seemed interested in asking Grubhub’s CEO Matt Maloney about “the competition”. In previous quarters, analysts have been keen to hear the company’s opinion on potential threats from rival services like UberEats and Postmates. This year, concerns seem to have evaporated.

Maloney gave his take on the situation: “if competition was really growing as fast, you would see us not hitting the targets. If anything, I think that there’s a significant tailwind in the industry.”

In fact, Maloney sees his competitors as good for business in the broadest sense. Telling listeners “all of us are babies in this industry” he explained that a plethora of successful companies operating in the space just accelerated the shift from paper menus to online ordering.

Grubhub has been on an acquisition streak over the last 12 months, snapping up 3 lesser companies. According to Maloney “in our industry, growth by acquisition is strong.” He also said that he was keeping a close eye on DoorDash and Postmates – both of which compete with Grubhub. How will the relationship between these companies and Grubhub play out? There will be “drama” ahead in 2018, and the year will “be interesting”.

Dominion holds Grubhub in its Global Trends Ecommerce Fund.

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