GrubHub Inc. (NYSE: GRUB) reported a 78% dip in earnings for the first quarter of 2019 due to higher costs and expenses as the food delivery giant is spending more on reach and marketing efforts for maintaining its market share in the space. However, the results exceeded analysts’ expectations.
Net income plunged by 78% to $6.9 million and earnings tumbled by 79% to $0.07 per share. Adjusted earnings dropped by 42% to $0.30 per share.
Revenue surged 39% to $324 million. Gross food sales grew 21% year-over-year to $1.5 billion. Active diners increased 28% to 19.3 million and daily average grubs grew 19% to 521,000.
Looking ahead into the second quarter of 2019, the company expects revenue in the range of $305 million to $325 million and adjusted EBITDA in the range of $49 million to $59 million. For the full year 2019, GrubHub still expects revenue in the range of $1.315 billion to $1.415 billion and adjusted EBITDA of $235 million to $265 million.
The company anticipates its typical seasonality in the second and third quarters and remained on track for both its top line and bottom line objectives for the full year 2019. The company believed that the dramatic increase in the scale and diversity of its diner base combined with the consistent diner value outlined in the supplemental disclosure sets GrubHub up for a great future.
The online delivery market is increasing around the globe due to the change in food habits and consumer preferences. Also, people started sticking to their home instead of a restaurant visit. This has created a tough competition prevailing in the delivery space.
Also read: Domino’s Pizza Q1 earnings results
Uber Eats (UBER), DoorDash, Postmates and Square’s (NYSE: SQ) Caviar remained the major delivery rivals for GrubHub. The company has resorted to the acquisition of firms like Tapingo, LevelUp, Seamless, Yelp’s Eat24 and many smaller firms in order to compete with the rivals.
Shares of GrubHub ended Thursday’s regular session up 0.79% at $69.78 on the NYSE. Following the earnings release, the stock inched up over 6% in the after-market session.