Grubhub stock dips as earnings miss despite expected delivery uptick from pandemic
CEO says company expects to use ‘nearly all of our profits in the second quarter to generate as many additional orders for our restaurant partners as possible’
Grubhub Inc. shares fell more than 4% in the extended session Wednesday after the company missed earnings expectations and did not issue revenue guidance amid the COVID-19 pandemic.
The online food-ordering platform
reported a first-quarter net loss of $33.4 million, or 36 cents a share, down from net income of 7 cents a share in the year-ago period. Adjusted for stock-compensation and other items, the company reported flat earnings, while analysts expected an adjusted loss of 4 cents a share.
Revenue rose to $363 million from $323.8 million in the year-ago period. On April 13, Grubhub told investors that it expected quarterly revenue of roughly $360 million, the midpoint of its guidance given Feb. 5 of $350 million to $370 million. The FactSet consensus revenue estimate was $358.1 million.
According to Cascend Securities, delivery demand increased 30% in March, which is the most sudden change it has seen. Cascend said that almost every major food-delivery brand saw increases in the U.S.
Many of the largest food-delivery companies are private, such as DoorDash and Instacart, but Uber Technology Inc.
runs the Uber Eats platform. Uber reports earnings Thursday after the closing bell.
While revenue grew, GrubHub’s active diner growth decreased from the previous quarter, to 24% from 28%, and daily orders decreased 1% from the year-ago quarter.
Grubhub said in April that while its business was trending higher for the first 10 weeks of the quarter, its sales suffered in mid-March due to the coronavirus pandemic. Grubhub said its corporate business was hurt as offices closed and people were stuck at home. The company said entering the second quarter, ordering trends improved “significantly” in markets less affected by the pandemic.
The company did not provide second-quarter revenue guidance in Wednesday’s release, as it has in the past. Executives plan to hold a conference call Thursday at 9 a.m. Eastern time.
Grubhub Chief Executive Matt Maloney did say that the company expected not to show profit in the second quarter as it spends to drive more business.
“Grubhub is using nearly all of our profits in the second quarter to generate as many additional orders for our restaurant partners as possible,” Maloney said in Wednesday’s release. “We hope that the darkest days are behind our restaurant partners and they can start focusing on the recovery.”
Though Grubhub has said it “has a clear responsibility to help restaurants and all working individuals in our ecosystem,” it has been criticized for the high commissions and fees it has charged the struggling restaurant industry. Cities such as San Francisco have passed legislation limiting the amount of fees the company is allowed to charge through the pandemic.
Grubhub shares closed up 6.4% during the regular session Wednesday, as the S&P 500 index
closed down 0.7%.