Grubhub Inc. (NYSE: GRUB) reported its first quarter financial results and topped analysts estimates in both revenue and earnings. The online delivery service saw its profits surge year over year as the company saw rapid growth faster-than-expected.
For the first quarter, Grubhub reported revenue of $232.6 million, increasing 49 percent year over year and topping Thomson Reuters’ estimates of $229.3 million. On a GAAP-basis, net income increased by 88 percent to $47.2 million or $0.52 per share. Thomson Reuters analysts forecasted an EPS of $0.38.
Active diners gew 72 percent to 15.1 million for the first quarter. Active diners are described as users who have placed an order in the past 12 months. Daily average grubs grew 35 percent to 436,900, just short of estimates of 442,500. Gross food sales were $1.2 billion, growing 39 percent year over year.
"Our team executed well in the first quarter, making meaningful progress toward our most significant goals for 2018. We've already launched dozens of new delivery markets, completed our Yelp and Eat24 integrations a quarter earlier than expected, and attracted a record quarterly number of organic new diners," said Grubhub CEO Matt Maloney.
"Our restaurant partnerships are broader and deeper than ever before, increasing our value to diners and driving sustained diner and order growth."
For 2018, Grubhub forecasts revenue in the range of $930 million to $965 million. For the second quarter, the company forecasts revenue in the range of $228 million to $236 million.
In the fourth quarter, Grubhub partnered with Yum! Brands (NYSE: YUM) to drive sales for Kentucky Fried Chicken and Taco Bell through the U.S. In exchange, YUM purchased $200 million of Grubhub’s common stock for a 3 percent stake then.
The partnership shows Grubhub beginning to partner with more and more brand name food services, in return expanding its market and increasing sales.
Maloney set a goal for delivery service to expand to over 100 new markets by the end of the year.
Despite showing strong growth, some analysts have turned bearish against the company after competition within the market began to ramp up. Similar services like UberEats and DoorDash, who recently raised $535 million during funding rounds from SoftBank.
Maloney said in a CNBC interview that consumers collectively spend nearly $200 billion a year on just take-out and delivery services alone.
"We're on track to do around $4 billion. So, $200 billion, $4 billion. We could 10x this company and it still wouldn't even barely touch [that]." said Maloney in the interview.
"We're by far the largest in the space.” added Maloney, “So there's so much room. So much room to grow."