Grubhub tops Q1 revenue expectations, but sales hit due to coronavirus

Yahoo Finance Video
Updated

On Wednesday, Grubhub reported Q1 revenues of $363 million, up 12% from the $324 million in the same period last year. Gross food sales grew 8% year-over-year to $1.6 billion, up from $1.5 billion. Yahoo Finance’s Myles Udland breaks down the company’s quarterly results.

Video Transcript

MYLES UDLAND: Grubhub, interesting quarter here-- stock down about 2% after hours. Company reporting a break-even quarter on earnings per share. The Street was looking for a slight loss-- so better than expected there, also topping expectations on the top line-- $363 million in revenue-- Street looking for $358. Now, Grubhub coming out with an interesting Amazon-like announcement, you could say. The company said that it would've been on track to report a nice profit in the second quarter, but it's going to use nearly all of its profits in the second quarter to quote, "generate as many additional orders from restaurant partners as possible."

So they are coming out with a Q2 forecast. That's for adjusted EBITDA of $5 million, but $21 million of adjusted EBITDA the company recorded in the first quarter. So they're putting, I guess you could impute, at least $16 million back into the business to generate additional orders for its customers. I guess not a huge surprise here-- active diners are up 24%, 23.9 million. Average daily Grubs-- love the name of that metric-- up to 516,000 in the first quarter. That's from 502,000 in the fourth quarter.

So again, the company saying it has a significant uptick in new diners and orders, with more people eating at home. The company had an update in mid-April saying that New York City was seeing orders down as that market was impacted. But clearly, as we've adjusted to our lives at home-- and cooking at home is nice, but it is nice also to not have to do that work. It seems more people are working in ordering food to be part of their routine, and Grubhub benefiting from some of that. But if they're going to put all those profits back into the business, hurts profitability next quarter-- stock down 1%.

JEN ROGERS: An Amazon-like move-- but I guess everyone can't do $4 billion. Got to do what you have.

MYLES UDLAND: We'll take a $15 million. You know, look, we got baby steps here.

JEN ROGERS: Yeah, exactly. Like, that's what some CEOs get paid.