Grubhub has also partnered with companies like Shake Shack, Dine Brands and McDonald’s (NYSE: MCD) for delivery services. These alliances are a good move and will benefit the company’s topline numbers.
However, increased spending on marketing and expansion is expected to take a toll on earnings. The company faces tough competition from rivals like UberEats, DoorDash and Postmates. It has also seen a sequential decrease in metrics like gross food sales and daily average grubs, which has raised concerns. Gross food sales measures the total value of food ordered through the platform.
Also read: Grubhub Q2 2019 Earnings Conference Call Transcript
In the second quarter of 2019, Grubhub beat revenue estimates but missed earnings expectations. Revenue grew 36% to $325 million while adjusted EPS fell 46% to $0.27.
For the third quarter, Grubhub has guided for revenues of $320-340 million and adjusted EPS of $0.34. For the full year of 2019, the company expects revenues of $1.34-1.39 billion and adjusted EPS of $1.44.
Shares of Grubhub have fallen 27% year-to-date. The stock has an average price target of $88.00.