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Grubhub Inc. reported fourth-quarter 2018 earnings of 19 cents per share, which lagged the Zacks Consensus Estimate by 9 cents. The figure plunged 48.6% on a year-over-year basis.
The decline can be attributed to higher investments on marketing and advertisements that fully offset strong top-line growth. Revenues surged 40.3% year over year to $287.7 million, which also missed the consensus mark of $289 million. Notably, revenue growth was also hurt by weather issues in December.
Total costs & expenses jumped 62.3% year over year to $290.6 million. Operations & support, sales & marketing, technology, and general & administrative expenses increased 76.4%, 54%, 70.1% and 48.9%, respectively.
Notably, revenue per order less operations and support costs fell sequentially in the fourth quarter, primarily due to $10-million investments in new markets. Moreover, the company spent $10-$20 million on advertisements. Technology expenses increased due to the acquisitions of LevelUp and Tapingo.
Adjusted EBITDA decreased 26.1% from the year-ago quarter to $42.1 million. Adjusted EBITDA per order was 98 cents, down from $1.57 in the previous quarter. Incremental spending on delivery and advertisement were almost 70 cents per order.
Gross food sales climbed 20.9% year over year to $1.38 billion.
As of Dec 31, 2018, active diners were 17.7 million compared with 14.5 million in the year-ago quarter. Daily Average Grubs (DAGs) were 467,500 compared with 392,500 reported in the year-ago quarter. Excluding Eat24 orders, growth was 22%.
Further, the company launched GrubHub Delivery in 125 new markets compared with its original expectation of 100 new markets in the reported quarter.
Grubhub Delivery now accounts for approximately 30% of the company’s DAGs. Moreover, the company now has more than 105,000 restaurant partners in more than 2,000 cities in all the 50 states.
Guidance
For first-quarter 2019, GrubHub forecasts revenues between $310 million and $330 million. Adjusted EBITDA is anticipated to be $40-$50 million.
For 2019, GrubHub forecasts revenues between $1.315 billion and $1.415 billion. Adjusted EBITDA is expected to be $235-$265 million.
GrubHub delivery will continue to launch in new markets in 2019 but at a significantly slower rate than 2018.
Twilio, ASGN and Cogent are expected to report quarterly results on Feb 12, 13 and 21, respectively.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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Grubhub (GRUB) Q4 Earnings Miss, Costs & Expenses Jump Y/Y
Grubhub Inc. reported fourth-quarter 2018 earnings of 19 cents per share, which lagged the Zacks Consensus Estimate by 9 cents. The figure plunged 48.6% on a year-over-year basis.
The decline can be attributed to higher investments on marketing and advertisements that fully offset strong top-line growth. Revenues surged 40.3% year over year to $287.7 million, which also missed the consensus mark of $289 million. Notably, revenue growth was also hurt by weather issues in December.
Total costs & expenses jumped 62.3% year over year to $290.6 million. Operations & support, sales & marketing, technology, and general & administrative expenses increased 76.4%, 54%, 70.1% and 48.9%, respectively.
Notably, revenue per order less operations and support costs fell sequentially in the fourth quarter, primarily due to $10-million investments in new markets. Moreover, the company spent $10-$20 million on advertisements. Technology expenses increased due to the acquisitions of LevelUp and Tapingo.
Adjusted EBITDA decreased 26.1% from the year-ago quarter to $42.1 million. Adjusted EBITDA per order was 98 cents, down from $1.57 in the previous quarter. Incremental spending on delivery and advertisement were almost 70 cents per order.
Grubhub Inc. Price, Consensus and EPS Surprise
Grubhub Inc. Price, Consensus and EPS Surprise | Grubhub Inc. Quote
Quarter Details
Gross food sales climbed 20.9% year over year to $1.38 billion.
As of Dec 31, 2018, active diners were 17.7 million compared with 14.5 million in the year-ago quarter. Daily Average Grubs (DAGs) were 467,500 compared with 392,500 reported in the year-ago quarter. Excluding Eat24 orders, growth was 22%.
Further, the company launched GrubHub Delivery in 125 new markets compared with its original expectation of 100 new markets in the reported quarter.
Grubhub Delivery now accounts for approximately 30% of the company’s DAGs. Moreover, the company now has more than 105,000 restaurant partners in more than 2,000 cities in all the 50 states.
Guidance
For first-quarter 2019, GrubHub forecasts revenues between $310 million and $330 million. Adjusted EBITDA is anticipated to be $40-$50 million.
For 2019, GrubHub forecasts revenues between $1.315 billion and $1.415 billion. Adjusted EBITDA is expected to be $235-$265 million.
GrubHub delivery will continue to launch in new markets in 2019 but at a significantly slower rate than 2018.
Zacks Rank & Stocks to Consider
GrubHub currently has a Zacks Rank #3 (Hold).
Twilio (TWLO - Free Report) , ASGN (ASGN - Free Report) and Cogent Communications (CCOI - Free Report) are some better-ranked stocks in the broader computer and technology sector. All three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Twilio, ASGN and Cogent are expected to report quarterly results on Feb 12, 13 and 21, respectively.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>