Grubhub beats the street – share price soars +27%!
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Grubhub beats the street – share price soars +27%!

Online food ordering service Grubhub reported quarterly earnings last week that absolutely smashed analysts’ expectations. In fact the company did so well that it’s share price jumped up by 27% on the back of the earnings! As investors should expect, this sudden appreciation receded somewhat in the following days. But at time of writing, Grubhub’s share price is still up by almost 15% this year - not bad for five weeks’ work!

Grubhub’s share price appreciation this year remains impressive

graph 1202 grubhub

SOURCE: Yahoo Finance

Grubhub outperformed on every single metric. Revenue was up by 49% from the year-ago quarter to a new high of $205.1 million, while active diners (that is, the number of people who use Grubhub’s service) rose to 14.5 million. “Grubs” – the average number of revenue-generating order made per day – rose by 34% against the same period last year, to 392,500. Because Grubhub’s business is eminently scalable, as net income has risen, profitability soared – up 68% against the same quarter in the previous year!

Bolstering these phenomenal figures was another good news story from the company. Grubhub partner Yum! (owner of Kentucky Fried Chicken and Taco Bell) has agreed to buy a $200 million stake in the company, and will see 80% of its outlets on Grubhub’s platform within a year. Needless to say, given the size and popularity of these brands, that’s a significant tailwind for gross food sales in the foreseeable future.

Speaking about the merger, Grubhub’s CEO Matt Maloney told listeners on an earnings call:

“While GrubHub's brand as the largest and best platform for restaurant delivery appeals to millions and has a long history, people ultimately come to our products because of the restaurants. The love and trust consumers have for our restaurant partners makes our platform compelling to new diners and retains our repeat diners week after week. This is why our Yum! partnership announced separately this morning is so exciting for our business. KFC and Taco Bell are not only iconic restaurant brands, but they have a significant presence in markets where GrubHub has less awareness.”

Disclosure

Dominion holds Grubhub in its Global Trends Ecommerce Fund.


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