More diners, restaurants help Grubhub beat revenue estimates
By Hilary Russ and Chinmay Rautmare
(Reuters) - Grubhub Inc (NYSE: GRUB) topped Wall Street revenue estimates on Wednesday, adding more restaurants to its online food delivery platform and luring more diners as it predicted continued growth for 2020.
Shares rose more than 6% in after-market trading, a dramatic difference from last quarter, when its stock crashed after it shifted strategy in an effort to fend off rivals.
"We are significantly profitable, while both of the main competitors in our space are significantly unprofitable and will have a difficult time breaking even," Chief Executive Officer Matt Maloney told Reuters in a phone interview.
The company forecast full-year 2020 revenue between $1.4 billion and $1.5 billion and said it will generate $100 million of earnings.
Last year, Grubhub's revenues were $1.3 billion, a 30% year-over-year increase from $1.0 billion in 2018.
The oldest and until last year most dominant U.S. food delivery platform, Grubhub faces increased competition from rivals DoorDash Inc, Uber Technologies Inc's (NYSE: UBER) Uber Eats and Postmates Inc.
Grubhub reported a $4.2 million loss in the fourth quarter of 2019, compared with a $17.6 million profit for the same quarter the prior year.
Most analysts do not think the economics of the delivery industry are sustainable and expect consolidation.
"I look forward to opportunities to acquire more companies later this year," Maloney said, noting that he had no plans to sell Grubhub.
In a letter to shareholders, Grubhub said it was testing a new diner subscription program in several areas. It hopes to launch the program nationally in coming months.
It has also been building loyalty programs that work together with partner restaurants.
Its most controversial move - adding non-partnered restaurants - came amid its disappointing third-quarter results.
The change prompted some brokerages to downgrade the company, but since then Grubhub has added 150,000 new non-partner restaurants, it said Wednesday.
Orders from non-partnered restaurants will not make money for Grubhub, the shareholder letter said. But they will draw new customers who would otherwise go to a competitor.
With its 155,000 partner restaurants, the platform now hosts 305,000 total restaurants online.
Some of those are more recent big names, including Dine Brands Global Inc (NYSE: DIN), McDonald's Corp (NYSE: MCD) and Shake Shack Inc (NYSE: SHAK).
Chicago-based Grubhub said it had 22.6 million active diners in the quarter, above analysts' average estimate of 22.2 million.
Revenue rose 19% to $341.3 million, above analysts' average estimate of $325.3 million, according to IBES data from Refinitiv.
(Reporting by Chinmay Rautmare in Bengaluru and Hilary Russ from New York; Editing by Shinjini Ganguli and Lisa Shumaker)