It’s been trying times for Grubhub recently, with investors doubting its ability to withstand the fierce competition in the online food delivery business. But thanks in part to Q1 revenue gains reported on Thursday (April 25), the company was back in the good graces of investors, at least temporarily.
Grubhub reported revenue for the first quarter of 2019 of about $323.8 million, up 39 percent year over year. That just barely beat analyst expectations of $322.8 million. The online food delivery service — which took a beating after its release of Q4 2018 financials — also reported gross food sales of $1.5 billion, a 21 percent year-over-year increase. Active diners on the platform increased 28 percent compared to the same period last year, to 19.3 million. Average daily grubs, meanwhile, increased 19 percent year over year, to 521,000.
Net income in Q1 2019 stood at $6.9 million, up 78 percent from the first quarter of 2018. Adjusted earnings of 30 cents per share beat analyst expectations of 25 cents per share.
“The strong momentum in our business throughout 2018 continued in the first quarter of 2019. The dramatic increase in the scale and diversity of our diner base combined with the consistent diner value outlined in the supplemental disclosure sets us up for a great future,” said Grubhub President and CFO Adam DeWitt. “We anticipate our typical seasonality in the second and third quarters and remain on track for both our topline and bottom-line objectives for the full year 2019.”
Optimism was the name of the game for Grubhub on Thursday, but observers of the online food delivery industry have been signaling concern about the company’s prospects going forward. In March, for instance, a report from KeyBanc Capital Markets said the food delivery service is struggling in its high competition environment and failing to keep pace with players like Uber Eats and DoorDash. “Diner retention, initial diner spend and peak diner spend all appear to be deteriorating,” wrote the analysts.
Uber, as it preps a run-up to an initial public offering (IPO), has been highly focused on its Uber Eats food delivery service and investing heavily. More critically, however, DoorDash is currently valued at $7.1 billion and is rapidly eating up Grubhub’s market share. “DoorDash’s share gains began accelerating in 2Q18 and show little sign of slowing,” the report said.