GrubHub’s Successful IPO

According to a Euromonitor report, local independent restaurants account for 61% of all US restaurants. Within these small restaurants, takeout accounts for a big share of revenues—nearly $67 billion were spent on takeout by Americans in 2013.

GrubHub’s Financials
New York-based GrubHub is among the leading online and mobile platforms for restaurant takeout and delivery orders. GrubHub’s platform enables diners to place an order for delivery directly through their website. They help the restaurants by making their menus and offers available online through their site. They help the diners by providing them a platform that is high on UI, which personalizes recommendations based on their browsing history.

The company has tie-ups with 28,800 restaurants in more than 600 cities in the country. GrubHub claims that their system leaves no room for order errors as they have a “direct line” into the kitchen. GrubHub strengthened their position in the market when they acquired Seamless in 2013 for an undisclosed sum. The acquisition helped GrubHub grow in Seamless’ focus market of New York.

Their platform processed more than 135,000 daily average meals in 2013. Their platform also helped restaurants deliver $1.3 billion in Gross Food Sales. The number of active diners increased by 1.9 million to 3.4 million as of December 2013. Their revenues grew 67% over the year to $137.1 million. They ended the year with a net income of $6.7 million and an adjusted EBITDA of $38.1 million.

For the recently ended second quarter, GrubHub saw revenues grow 48% over the year to $60 million, significantly ahead of the Street’s estimate of $54.7 million. They ended the quarter with active diners growing to 4.19 million and the number of daily average grubs growing to 174,500 compared with 130,100 a year ago. EPS of $0.03 missed the market’s projections of $0.04.

GrubHub expects to end the current quarter with revenues of $55.5 million-$57.5 million and an adjusted EBITDA of $13 million-$15 million. The market was looking for revenues of $54.3 million.

GrubHub’s Competition

Recently, the online restaurant platform market has attracted a lot of attention. Amazon announced their plans to enter the food takeout service by extending the Amazon Local offering. Users will be able to place an order for takeout through the Local app. Online travel giant Priceline also entered the restaurant reservation market by purchasing OpenTable for $2.6 billion. The acquisition led to a lot of speculation by analysts who expected GrubHub to be next on the block. Some even believe that Amazon may be able to expand their takeout service by acquiring GrubHub.

Till earlier this year, GrubHub was venture funded with $84 million in funding from Mesirow Financial, Greenspring Associates, Lightspeed Venture Partners, DAG Ventures, Benchmark, Amicus Capital, Origin Ventures, and Leo Capital Holdings. In April this year, they went public and raised $200 million by selling 7.4 million shares at $26 each on the NYSE. Their stock is trading at $35.49 with a market capitalization of $2.84 billion. It touched a 52-week high of $45.80 last month.