Grubhub profit better than expected, shares soar

LOS ANGELES (Reuters) - Grubhub Inc's reported a first-quarter profit on Thursday that topped Wall Street's view after the restaurant delivery service ramped up spending to woo restaurant partners and encourage customers to order more often and spend more. It shares surged 8.2 percent to $75.47. Grubhub, which is battling startups ranging from DoorDash and Uber Eats to Amazon.com Inc's Amazon Restaurants, has swept up more than a half-dozen companies since its April 2014 initial public offering and has been spending aggressively to fend off competition.

Reuters April 26, 2019 06:05:19 IST
Grubhub profit better than expected, shares soar

Grubhub profit better than expected shares soar

LOS ANGELES (Reuters) - Grubhub Inc's reported a first-quarter profit on Thursday that topped Wall Street's view after the restaurant delivery service ramped up spending to woo restaurant partners and encourage customers to order more often and spend more.

It shares surged 8.2 percent to $75.47.

Grubhub, which is battling startups ranging from DoorDash and Uber Eats to Amazon.com Inc's Amazon Restaurants, has swept up more than a half-dozen companies since its April 2014 initial public offering and has been spending aggressively to fend off competition.

During the first quarter, Grubhub had an increase in diners, improved quality and stable costs, the company's chief financial officer, Adam DeWitt, said.

"There's been a lot of investor fear around Grubhub losing its edge as a leader in the digital takeout market," said Wedbush Securities analyst Ygal Arounian.

The latest report showed that Grubhub has a differentiated offering and "will remain a leader," Arounian said.

Active diners grew 28 percent to 19.3 million during the quarter, bolstered by partner Taco Bell's national campaign promoting delivery from the fast-food chain.

Grubhub's first-quarter net income fell 78 percent to $6.9 million, or 7 cents per share. Excluding items, it earned 30 cents per share, beating analysts average estimate of 25 cents per share, according to IBES data from Refinitiv.

The company, which also has projects with Dunkin' Donuts and Pizza Hut, hinted at more to come.

"I would love to announce the multiple deals that I'm aware are already signed, but we can't because the brands would prefer to announce when they are preparing to announce," Chief Executive Matthew Maloney said on a conference call.

Revenue jumped 39 percent to $323.8 million during the quarter, topping analysts' estimate of $323 million.

Total costs and expenses climbed 57 percent to $314.9 million during the quarter, when sales and marketing outlays expanded almost 61 percent to $78.5 million.

Uber Technologies Inc earlier this month said Uber Eats had $1.5 billion in 2018 revenue, but that payments to its Uber Eats drivers "historically have exceeded the cumulative delivery fees paid by consumers."

Beyond that, the fast-growing service charges its largest chain restaurant partners - which include McDonald's Corp - lower service fees to compete in the crowded field.

Those pressures have caused Uber Eats' "take rate" - or the percentage of revenue it keeps from each restaurant order - to decline and could "at times" push then into losses, Uber said.

(Reporting by Lisa Baertlein in Los Angeles and Shariq Khan in Bengaluru; Editing by Cynthia Osterman; Editing by Leslie Adler)

This story has not been edited by Firstpost staff and is generated by auto-feed.

Updated Date:

TAGS:

also read

France, Germany to agree to NATO role against Islamic State - sources
| Reuters
World

France, Germany to agree to NATO role against Islamic State - sources | Reuters

By Robin Emmott and John Irish | BRUSSELS/PARIS BRUSSELS/PARIS France and Germany will agree to a U.S. plan for NATO to take a bigger role in the fight against Islamic militants at a meeting with President Donald Trump on Thursday, but insist the move is purely symbolic, four senior European diplomats said.The decision to allow the North Atlantic Treaty Organization to join the coalition against Islamic State in Syria and Iraq follows weeks of pressure on the two allies, who are wary of NATO confronting Russia in Syria and of alienating Arab countries who see NATO as pushing a pro-Western agenda."NATO as an institution will join the coalition," said one senior diplomat involved in the discussions. "The question is whether this just a symbolic gesture to the United States

China's Xi says navy should become world class
| Reuters
World

China's Xi says navy should become world class | Reuters

BEIJING Chinese President Xi Jinping on Wednesday called for greater efforts to make the country's navy a world class one, strong in operations on, below and above the surface, as it steps up its ability to project power far from its shores.China's navy has taken an increasingly prominent role in recent months, with a rising star admiral taking command, its first aircraft carrier sailing around self-ruled Taiwan and a new aircraft carrier launched last month.With President Donald Trump promising a US shipbuilding spree and unnerving Beijing with his unpredictable approach on hot button issues including Taiwan and the South and East China Seas, China is pushing to narrow the gap with the U.S. Navy.Inspecting navy headquarters, Xi said the navy should "aim for the top ranks in the world", the Defence Ministry said in a statement about his visit."Building a strong and modern navy is an important mark of a top ranking global military," the ministry paraphrased Xi as saying.