UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934	
For the quarterly period ended March 31, 2017
OR
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934	
Commission File Number 1-36389
 
GRUBHUB INC.
(Exact name of registrant as specified in its charter)

  Delaware	   	46-2908664	
(State or other jurisdiction of
incorporation or organization)	   	(I.R.S. Employer
Identification No.)	
   	   	   	
111 W. Washington Street, Suite 2100
Chicago, Illinois	   	60602	
(Address of principal executive offices)	   	(Zip code)	
(877) 585-7878
(Registrant’s telephone number, including area code)
 
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes   ☒      No     ☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).     Yes   ☒      No   ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
 
Large Accelerated filer	☒	 	 	Accelerated filer	 	☐	
 	 	 	 	 	 	 	
Non-Accelerated filer	☐	(Do not check if a smaller reporting company)	 	Smaller reporting company	 	☐	
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company       ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.     ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes   ☐     No   ☒
As of May 5, 2017, 86,203,554 shares of common stock were outstanding.

 

GRUBHUB INC.
TABLE OF CONTENTS
 
PART I	
 	Page	
FINANCIAL INFORMATION	 	
 	 	 	
Item 1:	Condensed Consolidated Financial Statements (unaudited)	3	
 	Condensed Consolidated Balance Sheets as of March 31, 2017 and December 31, 2016	3	
 	Condensed Consolidated Statements of Operations for the three months ended March 31, 2017 and 2016	4	
 	Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2017 and 2016	4	
 	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2017 and 2016	5	
 	Notes to Condensed Consolidated Financial Statements	6	
 	 	 	
Item 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18	
Item 3:	Quantitative and Qualitative Disclosures About Market Risk	26	
Item 4:	Controls and Procedures	26	
PART II	
 	
OTHER INFORMATION	 	
Item 1:	Legal Proceedings	27	
Item 1A:	Risk Factors	27	
Item 2:	Unregistered Sales of Equity Securities and Use of Proceeds	27	
Item 3:	Defaults Upon Senior Securities	27	
Item 4:	Mine Safety Disclosures	27	
Item 5:	Other Information	27	
Item 6:	Exhibits	28	
Signatures	29	

 
2

Part I. F INANCIAL INFORMATION
 
 Item 1. Condensed Consolidated Financial Statements
GRUBHUB INC.
 CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
(UNAUDITED)
 
 	 	March 31, 2017	 	 	December 31, 2016	 	
ASSETS	 	 	 	 	 	 	 	 	
CURRENT ASSETS:	 	 	 	 	 	 	 	 	
Cash and cash equivalents	 	$	275,037	 	 	$	239,528	 	
Short term investments	 	 	86,235	 	 	 	84,091	 	
Accounts receivable, less allowances for doubtful accounts	 	 	62,400	 	 	 	60,550	 	
Prepaid expenses	 	 	9,245	 	 	 	12,168	 	
Total current assets	 	 	432,917	 	 	 	396,337	 	
PROPERTY AND EQUIPMENT:	 	 	 	 	 	 	 	 	
Property and equipment, net of depreciation and amortization	 	 	51,579	 	 	 	46,555	 	
OTHER ASSETS:	 	 	 	 	 	 	 	 	
Other assets	 	 	4,316	 	 	 	4,530	 	
Goodwill	 	 	436,455	 	 	 	436,455	 	
Acquired intangible assets, net of amortization	 	 	313,357	 	 	 	313,630	 	
Total other assets	 	 	754,128	 	 	 	754,615	 	
TOTAL ASSETS	 	$	1,238,624	 	 	$	1,197,507	 	
LIABILITIES AND STOCKHOLDERS’ EQUITY	 	 	 	 	 	 	 	 	
CURRENT LIABILITIES:	 	 	 	 	 	 	 	 	
Restaurant food liability	 	$	94,660	 	 	$	83,349	 	
Accounts payable	 	 	10,030	 	 	 	7,590	 	
Accrued payroll	 	 	5,805	 	 	 	7,338	 	
Taxes payable	 	 	3,062	 	 	 	865	 	
Other accruals	 	 	18,950	 	 	 	11,348	 	
Total current liabilities	 	 	132,507	 	 	 	110,490	 	
LONG TERM LIABILITIES:	 	 	 	 	 	 	 	 	
Deferred taxes, non-current	 	 	100,631	 	 	 	108,022	 	
Other accruals	 	 	6,898	 	 	 	6,876	 	
Total long term liabilities	 	 	107,529	 	 	 	114,898	 	
Commitments and contingencies	 	 	 	 	 	 	 	 	
STOCKHOLDERS’ EQUITY:	 	 	 	 	 	 	 	 	
Series A Convertible Preferred Stock, $0.0001 par value. Authorized: 25,000,000 shares as of March 31, 2017 and December 31, 2016; issued and outstanding: no shares as of March 31, 2017 and December 31, 2016.	 	 	—	 	 	 	—	 	
Common stock, $0.0001 par value. Authorized: 500,000,000 shares at March 31, 2017 and December 31, 2016; issued and outstanding: 85,941,215 and 85,692,333 shares as of March 31, 2017 and December 31, 2016, respectively	 	 	9	 	 	 	9	 	
Accumulated other comprehensive loss	 	 	(1,971	)	 	 	(2,078	)	
Additional paid-in capital	 	 	811,727	 	 	 	805,731	 	
Retained earnings	 	 	188,823	 	 	 	168,457	 	
Total Stockholders’ Equity	 	$	998,588	 	 	$	972,119	 	
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	 	$	1,238,624	 	 	$	1,197,507	 	

 

 
 
(See Notes to Condensed Consolidated Financial Statements (unaudited))

 
3

GRUBHUB INC.
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(UNAUDITED)
 
 	Three Months Ended March 31,	 	
 	2017	 	 	2016	 	
Revenues	$	156,134	 	 	$	112,240	 	
Costs and expenses:	 	 	 	 	 	 	 	
Sales and marketing	 	35,438	 	 	 	28,833	 	
Operations and support	 	59,519	 	 	 	34,987	 	
Technology (exclusive of amortization)	 	13,192	 	 	 	10,192	 	
General and administrative	 	12,960	 	 	 	13,589	 	
Depreciation and amortization	 	10,040	 	 	 	7,308	 	
Total costs and expenses	 	131,149	 	 	 	94,909	 	
Income before provision for income taxes	 	24,985	 	 	 	17,331	 	
Provision for income taxes	 	7,270	 	 	 	7,398	 	
Net income attributable to common stockholders	$	17,715	 	 	$	9,933	 	
Net income per share attributable to common stockholders:	 	 	 	 	 	 	 	
Basic	$	0.21	 	 	$	0.12	 	
Diluted	$	0.20	 	 	$	0.12	 	
Weighted-average shares used to compute net income per share attributable to common stockholders:	 	 	 	 	 	 	 	
Basic	 	85,874	 	 	 	84,710	 	
Diluted	 	87,120	 	 	 	85,699	 	

 

 
 
GRUBHUB INC.
 CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
(UNAUDITED)
 
 	Three Months Ended March 31,	 	
 	2017	 	 	2016	 	
Net income	$	17,715	 	 	$	9,933	 	
OTHER COMPREHENSIVE INCOME (LOSS)	 	 	 	 	 	 	 	
Foreign currency translation adjustments	 	107	 	 	 	(222	)	
COMPREHENSIVE INCOME	$	17,822	 	 	$	9,711	 	

 

 

 

 
(See Notes to Condensed Consolidated Financial Statements (unaudited))
 
4

GRUBHUB INC.
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(UNAUDITED)
 
 	 	Three Months Ended March 31,	 	
 	 	2017	 	 	2016	 	
CASH FLOWS FROM OPERATING ACTIVITIES	 	 	 	 	 	 	 	 	
Net income	 	$	17,715	 	 	$	9,933	 	
Adjustments to reconcile net income to net cash from operating activities:	 	 	 	 	 	 	 	 	
Depreciation	 	 	2,412	 	 	 	1,344	 	
Provision for doubtful accounts	 	 	95	 	 	 	443	 	
Deferred taxes	 	 	(4,741	)	 	 	(3,321	)	
Amortization of intangible assets	 	 	7,628	 	 	 	5,964	 	
Stock-based compensation	 	 	7,243	 	 	 	6,901	 	
Deferred rent	 	 	58	 	 	 	135	 	
Other	 	 	(110	)	 	 	(109	)	
Change in assets and liabilities, net of the effects of business acquisitions:	 	 	 	 	 	 	 	 	
Accounts receivable	 	 	(1,721	)	 	 	(9,956	)	
Prepaid expenses and other assets	 	 	2,957	 	 	 	(136	)	
Restaurant food liability	 	 	11,297	 	 	 	10,081	 	
Accounts payable	 	 	483	 	 	 	(5,434	)	
Accrued payroll	 	 	(1,534	)	 	 	(1,034	)	
Other accruals	 	 	9,808	 	 	 	3,855	 	
Net cash provided by operating activities	 	 	51,590	 	 	 	18,666	 	
CASH FLOWS FROM INVESTING ACTIVITIES	 	 	 	 	 	 	 	 	
Purchases of investments	 	 	(57,783	)	 	 	(56,227	)	
Proceeds from maturity of investments	 	 	55,833	 	 	 	76,615	 	
Capitalized website and development costs	 	 	(4,150	)	 	 	(2,331	)	
Purchases of property and equipment	 	 	(3,056	)	 	 	(3,259	)	
Acquisition of other intangible assets	 	 	(5,000	)	 	 	(250	)	
Other cash flows from investing activities	 	 	91	 	 	 	(173	)	
Net cash provided by (used in) investing activities	 	 	(14,065	)	 	 	14,375	 	
CASH FLOWS FROM FINANCING ACTIVITIES	 	 	 	 	 	 	 	 	
Repurchases of common stock	 	 	—	 	 	 	(9,771	)	
Proceeds from exercise of stock options	 	 	1,584	 	 	 	1,012	 	
Excess tax benefits related to stock-based compensation	 	 	—	 	 	 	10,610	 	
Taxes paid related to net settlement of stock-based compensation awards	 	 	(3,688	)	 	 	(682	)	
Net cash provided by (used in) financing activities	 	 	(2,104	)	 	 	1,169	 	
Net change in cash and cash equivalents	 	 	35,421	 	 	 	34,210	 	
Effect of exchange rates on cash	 	 	88	 	 	 	(191	)	
Cash and cash equivalents at beginning of year	 	 	239,528	 	 	 	169,293	 	
Cash and cash equivalents at end of the period	 	$	275,037	 	 	$	203,312	 	
SUPPLEMENTAL DISCLOSURE OF NON CASH ITEMS	 	 	 	 	 	 	 	 	
Cash paid for income taxes	 	$	746	 	 	$	—	 	
Capitalized property, equipment and website and development costs in
   accounts payable at period end	 	 	1,956	 	 	 	1,423	 	
 
(See Notes to Condensed Consolidated Financial Statements (unaudited))

5

 
GRUBHUB INC.
 Notes to Condensed Consolidated Financial Statements (unaudited)
 
1. Organization
Grubhub Inc., a Delaware corporation, and its wholly-owned subsidiaries (collectively referred to as the “Company”) provide an online and mobile platform for restaurant pick-up and delivery orders. Diners enter their delivery address or use geo-location within the mobile applications and the Company displays the menus and other relevant information for restaurants in its network. Orders may be placed directly online, via mobile applications or over the phone at no cost to the diner. The Company charges the restaurant a per order commission that is largely fee based. In certain markets, the Company also provides delivery services to restaurants on its platform that do not have their own delivery operations.

2. Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed consolidated interim financial statements include the accounts of Grubhub Inc. and have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the rules and regulations of the United States Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. These unaudited condensed consolidated interim financial statements include all wholly-owned subsidiaries and reflect all normal and recurring adjustments, as well as any other than normal adjustments, that are, in the opinion of management, necessary for a fair presentation of the results for the interim periods and should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016 filed with the SEC on February 28, 2017 (the “2016 Form 10-K”). All significant intercompany transactions have been eliminated in consolidation. Operating results for the three months ended March 31, 2017 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2017.
Use of Estimates
The preparation of condensed consolidated financial statements in accordance with GAAP requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and the related disclosures at the date of the financial statements, as well as the reported amounts of revenue and expenses during the periods presented. Estimates include revenue recognition, the allowance for doubtful accounts, website and internal-use software development costs, goodwill, depreciable lives of property and equipment, recoverability of intangible assets with definite lives and other long-lived assets, stock-based compensation and income taxes. Actual results could differ from these estimates.   
Changes in Accounting Principle
See “ Recently Issued Accounting Pronouncements ” below for a description of accounting principle changes adopted during the three months ended March 31, 2017 related to goodwill, business combinations and stock-based compensation. There have been no other material changes to the Company’s significant accounting policies described in the 2016 Form 10-K.
Recently Issued Accounting Pronouncements
In January 2017, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update No. 2017-04, “Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment” (“ASU 2017-04”). ASU 2017-04 eliminates Step 2 from the goodwill impairment test, which measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with its carrying amount. Under the amendment, an entity should recognize an impairment charge for the amount by which the reporting unit’s carrying amount exceeds its fair value, not to exceed the carrying amount of goodwill. The Company has elected to early adopt ASU 2017-04 beginning in the first quarter of 2017 and will apply the standard prospectively. The Company performs its annual goodwill impairment test as of September 30 th , or more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of the Company below its carrying value. The adoption of ASU 2017-04 may reduce the cost and complexity of evaluating goodwill for impairment, but it did not have, and is not expected to have, a material impact on the Company’s consolidated financial position, results of operations or cash flows.
In January 2017, the FASB issued Accounting Standards Update No. 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business” (“ASU 2017-01”). ASU 2017-01 provides that when substantially all the fair value of the assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. The Company has elected
6

GRUBHUB INC.
Notes to Condensed Consolidated Financial Statements (unaudited) (continued)
 
to adopt ASU 2017-01 early; therefore, ASU 2017-01 is effective for transactions beginning in the first quarter of 2017 on a prospective basis. There were no transactions during the quarter ended March 31, 2017 that met the definition of a business combination. The adoption of ASU 2017-01 did not have, and is not expected to have, a material impact on the Company’s consolidated financial position, results of operations or cash flows.
In August 2016, the FASB issued Accounting Standards Update No. 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments” (“ASU 2016-15”). ASU   2016-15 adds or clarifies guidance on the classification of certain cash receipts and payments in the statement of cash flows with the intent of reducing diversity in practice related to eight types of cash flows including, among others, debt prepayment or debt extinguishment costs, contingent consideration payments made after a business combination, and separately identifiable cash flows and application of the predominance principle. In addition, in November 2016, the FASB issued Accounting Standards Update No. 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash” (“ASU 2016-18”). ASU 2016-18  requires companies to include amounts generally described as restricted cash and restricted cash equivalents in cash and cash equivalents when reconciling beginning-of-period and end-of-period total amounts shown on the statement of cash flow . ASU 2016-15 and ASU 2016-18 are effective for the Company beginning in first quarter of 2018 and early adoption is permitted. The amendments should be applied using a retrospective transition method to each period presented. The adoption of ASU 2016-15 and ASU 2016-18 may impact the Company’s disclosures but is otherwise not expected to have a material impact on its consolidated financial position, results of operations or cash flows.
In June 2016, the FASB issued Accounting Standards Update No. 2016-13, “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). ASU 2016-13 introduces a new forward-looking approach, based on expected losses, to estimate credit losses on certain types of financial instruments, including trade receivables and held-to-maturity debt securities, which will require entities to incorporate considerations of historical information, current information and reasonable and supportable forecasts. This ASU also expands disclosure requirements. ASU 2016-13 is effective for the Company beginning the first quarter of 2020 and early adoption is permitted. The guidance will be applied using the modified-retrospective approach. The adoption of ASU 2016-13 is not expected to have a material impact on the Company’s consolidated financial position, results of operations or cash flows.
In March 2016, the  FASB issued Accounting Standards Update No. 2016-09, “Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting” (“ASU 2016-09”), which simplifies several aspects of the accounting for share-based payment transactions . Under ASU 2016-09, excess tax benefits and tax deficiencies are recognized as income tax expense or benefit in the income statement. ASU 2016-09 also provides entities with the option to elect an accounting policy to continue to estimate forfeitures of stock-based awards over the service period (current GAAP) or account for forfeitures when they occur . Under ASU 2016-09,  previously unrecognized excess tax benefits should be recognized using a modified retrospective transition. In addition, amendments requiring recognition of excess tax benefits and tax deficiencies in the income statement, as well as changes in the computation of weighted-average diluted shares outstanding, should be applied prospectively. ASU 2016-09 is effective for and was adopted by the Company beginning in the first quarter of 2017 and the impact of the adoption resulted in the following : 
 	•	During the three months ended March 31, 2017, the Company recognized excess tax benefits from stock-based compensation of $1.9 million within provision for income taxes on the condensed consolidated statements of operations and within net income on the condensed consolidated statements of cash flows. Prior to adoption, the tax effect of stock-based awards would have been recognized in additional paid-in capital on the condensed consolidated balance sheets and separately stated in financing activities in the condensed consolidated statements of cash flows (adopted prospectively).	
 	•	The Company has elected to continue to estimate forfeitures of stock-based awards over the service period.	
 	•	The Company recorded a cumulative-effect adjustment for previously unrecognized excess tax benefits of $2.7 million to opening retained earnings on the condensed consolidated balance sheets.	
 	•	The excess tax benefits from the assumed proceeds available to repurchase shares were excluded in the computation of diluted earnings per share for the three months ended March 31, 2017 (adopted prospectively).	
 
 In February 2016, the FASB issued Accounting Standards Update No.  2016-02 “Leases (Topic 842)” (“ASU 2016-02”). Under ASU 2016-02, a lessee will recognize in the statement of financial position a liability to make lease payments and a right-of-use asset for all leases (with the exception of short-term leases) at the commencement date. The recognition, measurement, and presentation of expenses and cash flows arising from a lease under ASU 2016-02 will not significantly change from current GAAP. ASU 2016-02 is effective beginning in the first quarter of 2019 with early adoption permitted. The Company will be required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The Company is currently evaluating
7

GRUBHUB INC.
Notes to Condensed Consolidated Financial Statements (unaudited) (continued)
 
the impact of adoption of ASU 2016-02 on its consolidated financial statements and anticipates that it will result in a significant increase in its long-term assets and liabilities but will have no material impact to its results of operations and cash flows.      
In May 2014, the FASB issued  Accounting Standards Update No.  2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”) ,  which supersedes the revenue recognition requirements in Topic 605, Revenue Recognition, including most  industry-specific requirements. ASU 2014-09 establishes a five-step revenue recognition process in which an entity will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. ASU 2014-09 also requires enhanced disclosures regarding the nature, amount, timing and uncertainty of revenues and cash flows from contracts with customers. In August 2015, the FASB issued Accounting Standards Update No. 2015-14, “Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date”, which defers the effective date of ASU 2014-09 by one year.  In March 2016, the FASB issued Accounting Standards Update No. 2016-08, “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net)” (“ASU 2016-08”), which clarifies the implementation guidance on principal versus agent considerations in the new revenue recognition standard. ASU 2016-08 clarifies how an entity should identify the unit of accounting (i.e. the specified good or service) for the principal versus agent evaluation and how it should apply the control principle to certain types of arrangements.  In April 2016, the FASB issued Accounting Standards Update No. 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing” (“ASU 2016-10”) ,  which clarifies the implementation guidance on identifying performance obligations and licensing. ASU 2016-10 reduces the cost and complexity of identifying promised goods or services and improves the guidance for determining whether promises are separately identifiable. In May 2016, the FASB issued Accounting Standards Update No. 2016-12, “ Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients”  (“ASU 2016-12”),  which amends the guidance in the new revenue standard on collectability, non-cash consideration, presentation of sales tax, and transition. In December 2016, the FASB issued Account Standards Update No. 2016-20, “Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers” (“ASU 2016-20”), which contains additional technical corrections and improvements to the revenue standard but doesn’t change any of the principles in the new revenue guidance.  ASU 2014-09, ASU 2016-08, ASU 2016-10, ASU 2016-12 and ASU 2016-20 will be effective for the Company in the first quarter of 2018. The Company currently anticipates applying the modified retrospective approach when adopting these ASUs . Based on the Company’s initial assessment, the adoption of these ASUs is expected to have an immaterial impact on the timing of recognition of certain revenues and result in the deferral of certain incremental costs of obtaining a contract. Management does not expect the impact the adoption of these ASUs to have a material impact on the  Company’s consolidated financial position, results of operations or cash flows or its business processes, systems and controls.

3. Acquisitions
2016 Acquisition
On May 5, 2016, the Company acquired all of the issued and outstanding stock of KMLEE Investments Inc. and LABite.com, Inc. (collectively, “LABite”). The purchase price for LABite was $65.8 million in cash, net of cash acquired of $2.6 million. LABite provides online and mobile food ordering and delivery services for restaurants in numerous western and southwestern cities of the United States.  The acquisition has expanded the Company’s restaurant, diner and delivery networks.
The results of operations of LABite have been included in the Company’s financial statements since May 5, 2016.
The excess of the consideration transferred in the acquisition over the net amounts assigned to the fair value of the assets acquired was recorded as goodwill, which represents the opportunity to expand restaurant delivery services and enhance the breadth and depth of the Company’s restaurant networks. Of the $40.2 million of goodwill related to the acquisition, $5.0 million is expected to be deductible for income tax purposes.
8

GRUBHUB INC.
Notes to Condensed Consolidated Financial Statements (unaudited) (continued)
 
The assets acquired and liabilities assumed of LABite were recorded at their estimated fair values as of the closing date of May 5, 2016. The following table summarizes the final purchase price allocation acquisition-date fair values of the assets and liabilities acquired in connection with the LABite acquisition: 
 	 	 	(in thousands)	 	
Cash and cash equivalents	 	 	$	2,566	 	
Accounts receivable	 	 	 	2,320	 	
Prepaid expenses and other assets	 	 	 	68	 	
Customer and vendor relationships	 	 	 	46,513	 	
Property and equipment	 	 	 	257	 	
Developed technology	 	 	 	1,731	 	
Goodwill	 	 	 	40,235	 	
Trademarks	 	 	 	440	 	
Accounts payable and accrued expenses	 	 	 	(6,303	)	
Net deferred tax liability	 	 	 	(19,412	)	
Total purchase price plus cash acquired	 	 	 	68,415	 	
Cash acquired	 	 	 	(2,566	)	
Net cash paid	 	 	$	65,849	 	
 
Additional Information
The estimated fair values of the intangible assets acquired were determined based on a combination of the income, cost, and market approaches to measure the fair value of the customer (restaurant) relationships, developed technology and trademarks. The fair value of the trademarks was measured based on the relief from royalty method. The cost approach, specifically the cost to recreate method, was used to value the developed technology. The income approach, specifically the multi-period excess earnings method, was used to value the customer (restaurant) relationships. These fair value measurements were based on significant inputs not observable in the market and thus represent Level 3 measurements within the fair value hierarchy.
The Company incurred certain expenses directly and indirectly related to acquisitions which were recognized in general and administrative expenses within the condensed consolidated statements of operations for the three months ended March 31, 2017 and 2016 of $0.4 million and $0.8 million, respectively.
Pro Forma
The following unaudited pro forma information presents a summary of the operating results of the Company for the three months ended March 31, 2016 as if the acquisition had occurred as of January 1 of the year prior to acquisition:

 	Three Months Ended
March 31, 2016	 	
 	(in thousands,
except per share data)	 	
Revenues	$	119,038	 	
Net income	 	11,339	 	
Net income per share attributable to common shareholders:	 	 	 	
Basic	$	0.13	 	
Diluted	$	0.13	 	
 
The pro forma adjustments reflect the amortization that would have been recognized for intangible assets, elimination of transaction costs incurred and pro forma tax adjustments for three months ended March 31, 2016 as follows:

 	Three Months Ended
March 31, 2016	 	
 	(in thousands)	 	
Depreciation and amortization	$	1,023	 	
Transaction costs	 	(831	)	
Income tax benefit	 	(82	)	
 
9

GRUBHUB INC.
Notes to Condensed Consolidated Financial Statements (unaudited) (continued)
 
The unaudited pro forma revenues and net income are not intended to represent or be indicative of the Company’s condensed consolidated results of operations or financial condition that would have been reported had the acquisition been completed as of the beginning of the periods presented and should not be taken as indicative of the Company’s future consolidated res ults of operations or financial condition.

4. Marketable Securities
The amortized cost, unrealized gains and losses and estimated fair value of the Company’s held-to-maturity marketable securities as of March 31, 2017 and December 31, 2016 were as follows:
 
 	 	March 31, 2017	 	
 	 	Amortized Cost	 	 	Unrealized Gains	 	 	Unrealized Losses	 	 	Estimated
Fair Value	 	
 	 	(in thousands)	 	
Cash and cash equivalents	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Commercial paper	 	$	69,104	 	 	$	—	 	 	$	(59	)	 	$	69,045	 	
Short term investments	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Commercial paper	 	 	76,734	 	 	 	—	 	 	 	(196	)	 	 	76,538	 	
Corporate bonds	 	 	9,501	 	 	 	6	 	 	 	(6	)	 	 	9,501	 	
Total	 	$	155,339	 	 	$	6	 	 	$	(261	)	 	$	155,084	 	
 
 	 	December 31, 2016	 	
 	 	Amortized Cost	 	 	Unrealized Gains	 	 	Unrealized Losses	 	 	Estimated
Fair Value	 	
 	 	(in thousands)	 	
Cash and cash equivalents	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Commercial paper	 	$	59,175	 	 	$	2	 	 	$	(28	)	 	$	59,149	 	
Corporate bonds	 	 	5,000	 	 	 	1	 	 	 	—	 	 	 	5,001	 	
U.S. government agency bonds	 	 	5,500	 	 	 	—	 	 	 	—	 	 	 	5,500	 	
Short term investments	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Commercial paper	 	 	73,002	 	 	 	—	 	 	 	(214	)	 	 	72,788	 	
Corporate bonds	 	 	11,089	 	 	 	4	 	 	 	(5	)	 	 	11,088	 	
Total	 	$	153,766	 	 	$	7	 	 	$	(247	)	 	$	153,526	 	
 
All of the Company’s marketable securities were classified as held-to-maturity investments and have maturities within one year of March 31, 2017.
The gross unrealized losses, estimated fair value and length of time the individual marketable securities were in a continuous loss position for those marketable securities in an unrealized loss position as of March 31, 2017 and December 31, 2016 were as follows:
 
 	 	March 31, 2017	 	
 	 	Less Than 12 Months	 	 	12 Months or Greater	 	 	Total	 	
 	 	Estimated
Fair Value	 	 	Unrealized Loss	 	 	Estimated
Fair Value	 	 	Unrealized
  Loss	 	 	Estimated
Fair Value	 	 	Unrealized Loss	 	
 	 	(in thousands)	 	
Commercial paper	 	$	145,583	 	 	$	(255	)	 	$	—	 	 	$	—	 	 	$	145,583	 	 	$	(255	)	
Corporate bonds	 	 	5,969	 	 	 	(6	)	 	 	—	 	 	 	—	 	 	 	5,969	 	 	 	(6	)	
Total	 	$	151,552	 	 	$	(261	)	 	$	—	 	 	$	—	 	 	$	151,552	 	 	$	(261	)	
10

GRUBHUB INC.
Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

 	 	December 31, 2016	 	
 	 	Less Than 12 Months	 	 	12 Months or Greater	 	 	Total	 	
 	 	Estimated
Fair Value	 	 	Unrealized Loss	 	 	Estimated
Fair Value	 	 	Unrealized  
Loss	 	 	Estimated
Fair Value	 	 	Unrealized Loss	 	
 	 	(in thousands)	 	
Commercial paper	 	$	130,938	 	 	$	(242	)	 	$	—	 	 	$	—	 	 	$	130,938	 	 	$	(242	)	
Corporate bonds	 	 	6,556	 	 	 	(5	)	 	 	—	 	 	 	—	 	 	 	6,556	 	 	 	(5	)	
Total	 	$	137,494	 	 	$	(247	)	 	$	—	 	 	$	—	 	 	$	137,494	 	 	$	(247	)	
 
During the three months ended March 31, 2017 and 2016, the Company recognized interest income of $0.4 million and $0.2 million, respectively, in general and administrative expenses within the condensed consolidated statements of operations. During the three months ended March 31, 2017 and 2016, the Company did not recognize any other-than-temporary impairment losses related to its marketable securities.
The Company’s marketable securities are classified within Level 2 of the fair value hierarchy (see Note 13, Fair Value Measurement, for further details).

5. Goodwill and Acquired Intangible Assets
The components of acquired intangible assets as of March 31, 2017 and December 31, 2016 were as follows:
 
 	 	March 31, 2017	 	 	December 31, 2016	 	
 	 	Gross Carrying
Amount	 	 	Accumulated
Amortization	 	 	Net   Carrying
Value	 	 	Gross   Carrying
Amount	 	 	Accumulated
Amortization	 	 	Net   Carrying
Value	 	
 	 	(in thousands)	 	
Developed technology	 	$	7,467	 	 	$	(6,768	)	 	$	699	 	 	$	10,640	 	 	$	(9,575	)	 	$	1,065	 	
Customer and vendor relationships, databases	 	 	282,751	 	 	 	(64,633	)	 	 	218,118	 	 	 	282,751	 	 	 	(60,437	)	 	 	222,314	 	
Trademarks	 	 	106	 	 	 	(106	)	 	 	—	 	 	 	969	 	 	 	(582	)	 	 	387	 	
Other	 	 	5,250	 	 	 	(386	)	 	 	4,864	 	 	 	250	 	 	 	(62	)	 	 	188	 	
Total amortizable intangible assets	 	 	295,574	 	 	 	(71,893	)	 	 	223,681	 	 	 	294,610	 	 	 	(70,656	)	 	 	223,954	 	
Indefinite-lived trademarks	 	 	89,676	 	 	 	—	 	 	 	89,676	 	 	 	89,676	 	 	 	—	 	 	 	89,676	 	
Total acquired intangible assets	 	$	385,250	 	 	$	(71,893	)	 	$	313,357	 	 	$	384,286	 	 	$	(70,656	)	 	$	313,630	 	
 
The gross carrying amount and accumulated amortization of the Company’s developed technology and trademark intangible assets were adjusted by $3.2 million and $0.9 million, respectively, as of March 31, 2017 for certain fully amortized assets that were no longer in use.
Amortization expense for acquired intangible assets was $5.3 million and $5.0 million for the three months ended March 31, 2017 and 2016, respectively.
There were no changes in the carrying amount of goodwill during the three months ended March 31, 2017.
 
In January 2017, the Company entered into an agreement with Zoomer Inc. (“Zoomer”) whereby Zoomer waived non-solicitation provisions allowing the Company to engage the services of certain former Zoomer employees and consultants. The Company made total payments of $5.0 million to Zoomer during the three months ended March 31, 2017 in accordance with the terms of the agreement. The Company recognized these payments in other acquired intangible assets and will amortize the balance over an estimated useful life of 2.75 years.
 
11

GRUBHUB INC.
Notes to Condensed Consolidated Financial Statements (unaudited) (continued)
 
Estimated future amortization expense of acquired intangible assets as of March 31, 2017 was as follows:
 
 	 	(in thousands)	 	
The remainder of 2017	 	$	14,311	 	
2018	 	 	19,081	 	
2019	 	 	16,904	 	
2020	 	 	14,987	 	
2021	 	 	14,987	 	
Thereafter	 	 	143,411	 	
Total	 	$	223,681	 	

6. Property and Equipment
The components of the Company’s property and equipment as of March 31, 2017 and December 31, 2016 were as follows:
 
 	 	March 31, 2017	 	 	December 31, 2016	 	
 	 	(in thousands)	 	
Computer equipment	 	$	20,317	 	 	$	17,548	 	
Furniture and fixtures	 	 	5,239	 	 	 	4,842	 	
Developed software	 	 	32,120	 	 	 	26,460	 	
Purchased software and digital assets	 	 	1,751	 	 	 	1,360	 	
Leasehold improvements	 	 	19,388	 	 	 	19,038	 	
Property and equipment	 	 	78,815	 	 	 	69,248	 	
Accumulated amortization and depreciation	 	 	(27,236	)	 	 	(22,693	)	
Property and equipment, net	 	$	51,579	 	 	$	46,555	 	
The Company recorded depreciation and amortization expense for property and equipment other than developed software of $2.3 million and $1.4 million for the three months ended March 31, 2017 and 2016, respectively.
The Company capitalized developed software costs of $5.7 million and $3.0 million for the three months ended March 31, 2017 and 2016, respectively. Amortization expense for developed software costs, recognized in depreciation and amortization in the condensed consolidated statements of operations, for the three months ended March 31, 2017 and 2016 was $2.4 million and $0.9 million, respectively.

7. Commitments and Contingencies
Legal
In August 2011, Ameranth, Inc. (“Ameranth”) filed a patent infringement action against a number of defendants, including Grubhub Holdings Inc., in the U.S. District Court for the Southern District of California (the “Court”), Case No. 3:11-cv-1810 (“’1810 action”).
In March 2012, Ameranth initiated eight additional actions for infringement of a related patent, U.S. Patent No. 8,146,077 (“’077 patent”), in the same forum, including separate actions against Grubhub Holdings Inc., Case No. 3:12-cv-739 (“’739 action”), and Seamless North America, LLC, Case No. 3:12-cv-737 (“’737 action”). In August 2012, the Court severed the claims against Grubhub Holdings Inc. and Seamless North America, LLC in the ’1810 action and consolidated them with the ’739 action and the ’737 action, respectively. Later, the Court consolidated these separate cases against Grubhub Holdings Inc. and Seamless North America, LLC, along with the approximately 40 other cases Ameranth filed in the same district, with the original ’1810 action. In their answers, Grubhub Holdings Inc. and Seamless North America, LLC denied infringement and interposed various defenses, including non-infringement, invalidity, unenforceability and inequitable conduct.
 No trial date has been set for this case. The consolidated district court case was stayed until January 2017, when Ameranth’s motion to lift the stay and proceed on only the ‘077 patent was granted. The Company believes this case lacks merit and that it has strong defenses to all of the infringement claims. The Company intends to defend the suit vigorously. However, the Company is unable to predict the likelihood of success of Ameranth’s infringement claims and is unable to predict the likelihood of success of its counterclaims. The Company has not recorded an accrual related to this lawsuit as of March 31, 2017, as it does not believe a material
12

GRUBHUB INC.
Notes to Condensed Consolidated Financial Statements (unaudited) (continued)
 
loss is probable. It is a reasonable possibility that a loss may be incurred; however, the possible range of loss is not estimable given the status of the case and the uncertainty as to whether the cla ims at issue are with or without merit, will be settled out of court, or will be determined in the Company’s favor, whether the Company may be required to expend significant management time and financial resources on the defense of such claims, and whether the Company will be able to recover any losses under its insurance policies.
In addition to the matter described above, from time to time, the Company is involved in various other legal proceedings arising from the normal course of business activities.  For example, in the ordinary course of business, the Company receives labor and employment claims, including those related to misclassification of independent contractors. The Company does not believe these claims will have a material impact on its consolidated financial statements. However,  there is no assurance that these claims will not be combined into a collective or class action.
Indemnification
In connection with the merger of Seamless North America, LLC, Seamless Holdings Corporation and Grubhub Holdings Inc. in August 2013, the Company agreed to indemnify Aramark Holdings Corporation for negative income tax consequences associated with the October 2012 spin-off of Seamless Holdings Corporation that were the result of certain actions taken by the Company through October 29, 2014, in certain instances subject to a $15.0 million limitation. Management is not aware of any actions that would impact the indemnification obligation.
 
8. Debt
On April 29, 2016, the Company entered into a secured revolving credit facility (the “Credit Agreement”), which provides for aggregate revolving loans up to $185.0 million, subject to an increase of up to an additional $30 million under certain conditions. The credit facility will be available to the Company until April 28, 2021. There were no borrowings outstanding under the Credit Agreement as of March 31, 2017. There have been no changes in the terms of the Credit Agreement during the three months ended March 31, 2017.
During the three months ended March 31, 2017, the Company recognized interest expense of $0.2 million in general and administrative expenses within the condensed consolidated statements of operations.

9. Stock-Based Compensation
The Company has granted stock options, restricted stock units and restricted stock awards under its incentive plans. The Company recognizes compensation expense based on estimated grant date fair values for all stock-based awards issued to employees and directors, including stock options, restricted stock awards and restricted stock units.
Stock-based Compensation Expense
The total stock-based compensation expense related to all stock-based awards was $7.2 million and $6.9 million during the three months ended March 31, 2017 and 2016, respectively. As of March 31, 2017, $100.8 million of total unrecognized stock-based compensation expense is expected to be recognized over a weighted-average period of 3.3 years. The total unrecognized stock-based compensation expense to be recognized in future periods as of March 31, 2017 does not consider the effect of stock-based awards that may be granted in subsequent periods.
Excess tax benefits reflect the total of the individual stock option exercise transactions and vesting of restricted stock awards and restricted stock units in which the reduction to the Company’s income tax liability is greater than the deferred tax assets that were previously recorded. During the three months ended March 31, 2017, the Company recognized excess tax benefits from stock-based compensation of $1.9 million within provision for income taxes on the condensed consolidated statements of operations and within cash flows from operating activities on the condensed consolidated statements of cash flows. During the three months ended March 31, 2016, the Company reported excess tax benefits as a decrease in cash flows from operations and an increase in cash flows from financing activities of $10.6 million. The change in presentation of excess tax benefits during the three months ended March 31, 2017 is a result of the adoption of ASU 2016-09. See Note 2, Significant Accounting Policies, for additional information related to the impact of the adoption of ASU 2016-09.
The Company capitalized $0.9 million and $0.4 million during the three months ended March 31, 2017 and 2016, respectively, of stock-based compensation expense as website and software development costs .
13

GRUBHUB INC.
Notes to Condensed Consolidated Financial Statements (unaudited) (continued)
 
Stock Options
The Company granted 592,859 and 82,912 stock options during the three months ended March 31, 2017 and 2016, respectively. The fair value of each stock option award was estimated based on the assumptions below as of the grant date using the Black-Scholes-Merton option pricing model. Expected volatilities are based on a combination of the historical and implied volatilities of comparable publicly-traded companies and the historical volatility of the Company’s own common stock due to its limited trading history as there was no active external or internal market for the Company’s common stock prior to the Company’s initial public offering in April 2014. The Company uses historical data to estimate option exercises and employee terminations within the valuation model. Separate groups of employees that have similar historical exercise behavior are considered separately for valuation purposes. The Company transitioned from using a simplified method for calculating the expected term of its options as it has obtained sufficient historical information to derive a reasonable estimate, therefore, beginning in the first quarter of 2017 the expected term calculation for option awards considers a combination of the Company’s historical and estimated future exercise behavior. The risk-free rate for the period within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. The assumptions used to determine the fair value of the stock options granted during the three months ended March 31, 2017 and 2016 were as follows:  
 
 	 	Three Months Ended March 31,	 	
 	 	2017	 	 	2016	 	
Weighted-average fair value options granted	 	$	15.10	 	 	$	10.28	 	
Average risk-free interest rate	 	 	1.65	%	 	 	1.55	%	
Expected stock price volatilities	 	 	48.8	%	 	 	50.8	%	
Dividend yield	 	None	 	 	None	 	
Expected stock option life (years) (a)	 	 	4.00	 	 	 	6.08	 	
 	(a)	During the three months ended March 31, 2017, the expected term calculation for option awards was based on the Company’s historical exercise experience and estimated future exercise behavior. During the three months ended March 31, 2016, the expected term of option awards was estimated using a simplified method due to the limited period of time stock-based awards had been exercisable.	 	
_____________________________________________________________________________________________________________
Stock option awards as of December 31, 2016 and March 31, 2017, and changes during the three months ended March 31, 2017 , were as follows :
 
 	 	Options	 	 	Weighted-Average
Exercise Price	 	 	Aggregate Intrinsic
Value
(thousands)	 	 	Weighted-Average
Exercise Term
(years)	 	
Outstanding at December 31, 2016	 	 	2,992,724	 	 	$	22.43	 	 	$	46,608	 	 	 	7.68	 	
Granted	 	 	592,859	 	 	 	38.20	 	 	 	 	 	 	 	 	 	
Forfeited	 	 	(57,296	)	 	 	30.29	 	 	 	 	 	 	 	 	 	
Exercised	 	 	(99,588	)	 	 	15.91	 	 	 	 	 	 	 	 	 	
Outstanding at March 31, 2017	 	 	3,428,699	 	 	 	25.21	 	 	 	32,900	 	 	 	7.88	 	
Vested and expected to vest at March 31, 2017	 	 	3,131,565	 	 	 	25.15	 	 	 	30,425	 	 	 	7.88	 	
Exercisable at March 31, 2017	 	 	1,421,352	 	 	$	18.76	 	 	$	21,497	 	 	 	6.86	 	
 
The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the fair value of the common stock and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their in-the-money options on each date. This amount will change in future periods based on the fair value of the Company’s stock and the number of options outstanding. The aggregate intrinsic value of awards exercised during the three months ended March 31, 2017 and 2016 was $2.2 million and $2.8 million, respectively.
The Company recorded compensation expense for stock options of $2.9 million and $3.7 million for the three months ended March 31, 2017 and 2016 , respectively. As of March 31, 2017, total unrecognized compensation cost, adjusted for estimated forfeitures, related to non-vested stock options was $24.1 million and is expected to be recognized over a weighted-average period of 2.8 years.
14

GRUBHUB INC.
Notes to Condensed Consolidated Financial Statements (unaudited) (continued)
 
Restricted Stock Units and Restricted Stock Awards
Non-vested restricted stock units as of December 31, 2016 and March 31, 2017 , and changes during the three months ended March 31, 2017 were as follows:
 
 	 	Restricted Stock Units	 	
 	 	Shares	 	 	Weighted-Average
Grant Date Fair
Value	 	
Outstanding at December 31, 2016	 	 	1,516,354	 	 	$	28.46	 	
Granted	 	 	1,288,932	 	 	 	36.76	 	
Forfeited	 	 	(61,892	)	 	 	31.87	 	
Vested	 	 	(243,278	)	 	 	25.44	 	
Outstanding at March 31, 2017	 	 	2,500,116	 	 	$	32.95	 	
 
During the three months ended March 31, 2017 and 2016 , compensation expense related to restricted stock units was $4.3 million and $1.5 million, respectively. The aggregate fair value as of the vest date of restricted stock units that vested during the three months ended March 31, 2017 and 2016 was $9.5 million and $0.1 million, respectively. As of March 31, 2017 , $76.7 million of total unrecognized compensation cost, adjusted for estimated forfeitures, related to 2,500,116 non-vested restricted stock units with weighted-average grant date fair values of $32.95 is expected to be recognized over a weighted-average period of 3.5 years. The fair value of these awards was determined based on the Company’s stock price at the grant date and assumes no expected dividend payments through the vesting period.
Compensation expense recognized related to restricted stock awards was $1.7 million during the three months ended March 31, 2016. The aggregate fair value as of the vest date of restricted stock awards that vested during the three months ended March 31, 2016 was $1.7 million. As of March 31, 2017 , there were no remaining non-vested restricted stock awards or related unrecognized compensation cost.

10. Income Taxes
As of March 31, 2017, the New York City Department of Finance is performing a routine examination of Seamless Holdings Corporation for General Corporation Tax for the short tax period from October 17, 2012 through August 8, 2013. The Company does not believe, but cannot predict with certainty whether, there will be any additional tax liabilities, penalties and/or interest as a result of the audit.  

11. Stockholders’ Equity
As of March 31, 2017 and December 31, 2016 , the Company was authorized to issue two classes of stock: common stock and Series A Preferred Stock.
Common Stock
Each holder of common stock has one vote per share of common stock held on all matters that are submitted for stockholder vote. At March 31, 2017 and December 31, 2016 , there were 500,000,000 shares of common stock authorized. At March 31, 2017 and December 31, 2016 , there were 85,941,215 and 85,692,333 shares issued and outstanding, respectively. The Company did not hold any shares as treasury shares as of March 31, 2017 or December 31, 2016 .
 
On January 22, 2016, the Company’s Board of Directors approved a program that authorizes the repurchase of up to $100 million of the Company’s common stock exclusive of any fees, commissions or other expenses relating to such repurchases through open market purchases or privately negotiated transactions at the prevailing market price at the time of purchase. The repurchase program was announced on January 25, 2016. The repurchased stock may be retired or held as authorized but unissued treasury shares. The repurchase authorizations do not obligate the Company to acquire any particular amount of common stock or adopt any particular method of repurchase and may be modified, suspended or terminated at any time at management’s discretion. Repurchased and retired shares will result in an immediate reduction of the outstanding shares used to calculate the weighted-average common shares outstanding for basic and diluted net income per share at the time of the transaction. During the three months ended March 31, 2017, the Company did not repurchase any shares of its common stock.
15

GRUBHUB INC.
Notes to Condensed Consolidated Financial Statements (unaudited) (continued)
 
Series A Preferred Stock
The Company was authorized to issue 25,000,000 shares of preferred stock. There were no issued or outstanding shares of preferred stock as of March 31, 2017 or December 31, 2016 .
The Company’s equity as of December 31, 2016 and March 31, 2017 , and changes during the three months ended March 31, 2017 , were as follows:
 
 	 	(in thousands)	 	
Balance at December 31, 2016	 	$	972,119	 	
Net income	 	 	17,715	 	
Cumulative effect of change in accounting principle (a)	 	 	2,650	 	
Currency translation	 	 	107	 	
Stock-based compensation	 	 	8,101	 	
Shares repurchased and retired to satisfy tax withholding upon vesting	 	 	(3,688	)	
Stock option exercises, net of withholdings and other	 	 	1,584	 	
Balance at March 31, 2017	 	$	998,588	 	
 	(a)	See Note 2, Significant Accounting Policies, for additional details related to the impact of the adoption of ASU 2016-09 during the three months ended March 31, 2017.	
_________________________________________________________________________

 
 
12. Earnings Per Share Attributable to Common Stockholders
Basic earnings per share is computed by dividing net income attributable to common stockholders by the weighted-average number of common shares outstanding during the period without consideration for common stock equivalents. Diluted net income per share attributable to common stockholders is computed by dividing net income by the weighted-average number of common shares outstanding during the period and potentially dilutive common stock equivalents, including stock options, restricted stock units and restricted stock awards, except in cases where the effect of the common stock equivalent would be antidilutive. Potential common stock equivalents consist of common stock issuable upon exercise of stock options and vesting of restricted stock units and restricted stock awards using the treasury stock method. The calculation of weighted-average dilutive shares outstanding for the three months ended March 31, 2017 was impacted by the adoption of ASU 2016-09. See Note 2, Significant Accounting Policies , for additional details.
The following tables present the calculation of basic and diluted net income per share attributable to common stockholders for the three months ended March 31, 2017 and 2016 :

 	Three Months Ended March 31, 2017	 	 	 	Three Months Ended March 31, 2016	 	
 	Income
(Numerator)	 	 	Shares
(Denominator)	 	 	Per  Share
Amount	 	 	 	Income
(Numerator)	 	 	Shares
(Denominator)	 	 	Per  Share
Amount	 	
 	(in thousands, except per share data)	 	
Basic EPS	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income attributable to common stockholders	$	17,715	 	 	 	85,874	 	 	$	0.21	 	 	 	$	9,933	 	 	 	84,710	 	 	$	0.12	 	
Effect of Dilutive Securities	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Stock options	 	—	 	 	 	835	 	 	 	 	 	 	 	 	—	 	 	 	900	 	 	 	 	 	
Restricted stock units and restricted stock awards	 	—	 	 	 	411	 	 	 	 	 	 	 	 	—	 	 	 	89	 	 	 	 	 	
Diluted EPS	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income attributable to common stockholders	$	17,715	 	 	 	87,120	 	 	$	0.20	 	 	 	$	9,933	 	 	 	85,699	 	 	$	0.12	 	
 
During the three months ended March 31, 2016, the Company repurchased and retired 506,673 shares of its common stock at a weighted-average share price of $19.26, or an aggregate of $9.8 million. The repurchases resulted in a reduction of the outstanding shares used to calculate the weighted-average common shares outstanding for basic and diluted net earnings per share from the dates of the repurchases. See Note 11, Stockholders’ Equity, for additional details.
 
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GRUBHUB INC.
Notes to Condensed Consolidated Financial Statements (unaudited) (continued)
 
The number of shares of common stock underlying stock-based awards excluded from the calculation of diluted net income per share attributable to common stockholders because their effect would have been antidilutive for the three months ended March 31, 2017 and 2016 were as follows:  
 
 	 	Three Months Ended March 31,	 	
 	 	2017	 	 	2016	 	
Anti-dilutive shares underlying stock-based awards:	 	 	 	 	 	 	 	 	
Stock options	 	 	1,432,715	 	 	 	2,272,040	 	
Restricted stock units	 	 	1,150,714	 	 	 	1,280,982	 	

13. Fair Value Measurement
Certain assets and liabilities are required to be recorded at fair value on a recurring basis. Accounting standards define fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. The standards also establish a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.
The accounting guidance for fair value measurements prioritizes valuation methodologies based on the reliability of the inputs in the following three-tier value hierarchy:
 	Level 1	Quoted prices in active markets for identical assets or liabilities.	
 	Level 2	Assets and liabilities valued based on observable market data for similar instruments, such as quoted prices for similar assets or liabilities.	
 	Level 3	Unobservable inputs that are supported by little or no market activity; instruments valued based on the best available data, some of which is internally developed, and considers risk premiums that a market participant would require.	
The Company applied the following methods and assumptions in estimating its fair value measurements: the Company’s commercial paper, investments in corporate and U.S. government agency bonds and certain money market funds are classified as Level 2 within the fair value hierarchy because they are valued using inputs other than quoted prices in active markets that are observable directly or indirectly. Accounts receivable and accounts payable approximate fair value due to their generally short-term maturities.
The following table presents the balances of assets measured at fair value on a recurring basis as of March 31, 2017 and December 31, 2016 :
 
 	 	March 31, 2017	 	 	December 31, 2016	 	
 	 	Level 1	 	 	Level 2	 	 	Level 3	 	 	Level 1	 	 	Level 2	 	 	Level 3	 	
 	 	(in thousands)	 	
Money market funds	 	$	—	 	 	$	514	 	 	$	—	 	 	$	—	 	 	$	1,723	 	 	$	—	 	
Commercial paper	 	 	—	 	 	 	145,583	 	 	 	—	 	 	 	—	 	 	 	131,937	 	 	 	—	 	
Corporate bonds	 	 	—	 	 	 	9,501	 	 	 	—	 	 	 	—	 	 	 	16,089	 	 	 	—	 	
U.S. government agency bonds	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	5,500	 	 	 	—	 	
Total	 	$	—	 	 	$	155,598	 	 	$	—	 	 	$	—	 	 	$	155,249	 	 	$	—	 	
 
In addition to assets and liabilities that are recorded at fair value on a recurring basis, the Company is required to record certain assets and liabilities at fair value on a nonrecurring basis, generally as a result of acquisitions. See Note 3, Acquisitions , for further discussion of the fair value of assets and liabilities associated with acquisitions.
 
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 I tem 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following should be read in conjunction with the condensed consolidated financial statements and the notes thereto included elsewhere in this Quarterly Report on Form 10-Q and with the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016 (“2016 Form 10-K”) filed with the United States Securities and Exchange Commission (the “SEC”) on February 28, 2017. In addition to historical condensed consolidated financial information, the following discussion contains forward-looking statements that reflect the Company’s plans, estimates, and beliefs. Actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Quarterly Report on Form 10-Q, including those set forth in “Cautionary Statement Regarding Forward-Looking Statements” below.
Company Overview
Grubhub Inc. and its wholly-owned subsidiaries (collectively referred to as the “Company,” “Grubhub,” “we,” “us,” and “our”) is the leading online and mobile platform for restaurant pick-up and delivery orders, which the Company refers to as takeout. The Company connects more than 50,000 local restaurants with hungry diners in more than 1,100 cities across the United States and is focused on transforming the takeout experience. In certain markets, the Company also provides delivery services to restaurants on its platform that do not have their own delivery operations. As of March 31, 2017, the Company was providing delivery services in approximately 70 markets across the country. For restaurants, Grubhub generates higher margin takeout orders at full menu prices. The Grubhub platform empowers diners with a “direct line” into the kitchen, avoiding the inefficiencies, inaccuracies and frustrations associated with paper menus and phone orders. The Company has a powerful two-sided network that creates additional value for both restaurants and diners as it grows .  The Company charges restaurants a per-order commission that is primarily percentage-based. Most of the restaurants on the Company’s platform can choose their level of commission rate, at or above the base rate. A restaurant can choose to pay a higher rate, which affects its prominence and exposure to diners on the platform . Additionally, restaurants that use the Company’s delivery services pay an additional commission on the transaction for the use of those services.
Acquisition
On May 5, 2016, the Company acquired all of the issued and outstanding capital stock of KMLEE Investments Inc. and LABite.com, Inc. (collectively, “LABite”), a restaurant delivery service. For a description of the Company’s acquisition of LABite, see Note 3, Acquisitions .
Key Business Metrics
Within this Management’s Discussion and Analysis of Results of Operations, the Company discusses key business metrics, including Active Diners, Daily Average Grubs and Gross Food Sales. The Company’s key business metrics are defined as follows:
 	•	Active Diners .    The number of unique diner accounts from which an order has been placed in the past twelve months through the Company’s platform. Some diners could have more than one account if they were to set up multiple accounts using a different e-mail address for each account. As a result, it is possible that the Active Diner metric may count certain diners more than once during any given period.	
 	•	Daily Average Grubs .    The number of revenue generating orders placed on the Company’s platform divided by the number of days for a given period.	
 	•	Gross Food Sales.     The total value of food, beverages, taxes, prepaid gratuities, and any delivery fees processed through the Company’s platform. The Company includes all revenue generating orders placed on its platform in this metric; however, revenues are only recognized for the Company’s commissions from the transaction, which are a percentage of the total Gross Food Sales for such transaction.	
The Company’s key business metrics were as follows for the periods presented:
 
 	Three Months Ended March 31,	 	 	
 	2017	 	 	2016	 	 	% Change	 	 	
Active Diners	 	8,751,000	 	 	 	6,970,000	 	 	 	26	%	 	
Daily Average Grubs	 	324,600	 	 	 	267,800	 	 	 	21	%	 	
Gross Food Sales (in millions)	$	898.1	 	 	$	712.8	 	 	 	26	%	 	
 
 The Company experienced significant growth across all of its key business metrics, Active Diners, Daily Average Grubs and Gross Food Sales, during the three months ended March 31, 2017 as compared to the same periods in the prior year. Growth in all metrics was primarily attributable to increased product and brand awareness by diners largely as a result of marketing efforts and
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word-of-mouth referrals, better restaurant choices for diners in our markets, technology and product improvements, as well as, to a lesser extent, an increase from the inclusion of results from the acquisition of LABite.
Results of Operations
Three Months Ended March 31, 2017 and 2016
The following table sets forth the Company’s results of operations for the three months ended March 31, 2017 as compared to the same period in the prior year presented in dollars and as a percentage of revenues:
 
 	Three Months Ended March 31,	 	 	 	 	 	 	 	 	 	
 	2017	 	 	2016	 	 	 	 	 	 	 	 	 	
 	Amount	 	 	% of
revenue	 	 	Amount	 	 	% of
revenue	 	 	$
Change	 	 	%
Change	 	
 	(in thousands, except percentages)	 	
Revenues	$	156,134	 	 	 	100	%	 	$	112,240	 	 	 	100	%	 	$	43,894	 	 	 	39	%	
Costs and expenses:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Sales and marketing	 	35,438	 	 	 	23	%	 	 	28,833	 	 	 	26	%	 	 	6,605	 	 	 	23	%	
Operations and support	 	59,519	 	 	 	38	%	 	 	34,987	 	 	 	31	%	 	 	24,532	 	 	 	70	%	
Technology (exclusive of amortization)	 	13,192	 	 	 	8	%	 	 	10,192	 	 	 	9	%	 	 	3,000	 	 	 	29	%	
General and administrative	 	12,960	 	 	 	8	%	 	 	13,589	 	 	 	12	%	 	 	(629	)	 	 	(5	%)	
Depreciation and amortization	 	10,040	 	 	 	6	%	 	 	7,308	 	 	 	7	%	 	 	2,732	 	 	 	37	%	
Total costs and expenses (a)	 	131,149	 	 	 	84	%	 	 	94,909	 	 	 	85	%	 	 	36,240	 	 	 	38	%	
Income before provision for income taxes	 	24,985	 	 	 	16	%	 	 	17,331	 	 	 	15	%	 	 	7,654	 	 	 	44	%	
Provision for income taxes	 	7,270	 	 	 	5	%	 	 	7,398	 	 	 	7	%	 	 	(128	)	 	 	(2	%)	
Net income attributable to common stockholders	$	17,715	 	 	 	11	%	 	$	9,933	 	 	 	9	%	 	$	7,782	 	 	 	78	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
NON-GAAP FINANCIAL MEASURES:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Adjusted EBITDA (b)	$	42,677	 	 	 	27	%	 	$	32,371	 	 	 	29	%	 	$	10,306	 	 	 	32	%	
(a)	Totals of percentage of revenues may not foot due to rounding.	
(b)	For an explanation of Adjusted EBITDA as a measure of the Company’s operating performance and a reconciliation to net earnings, see “ Non-GAAP Financial Measure—Adjusted EBITDA. ”	
 
Revenues
Revenues increased by $43.9 million, or 39%, for the three months ended March 31, 2017 compared to the same period in 2016. The increase was primarily related to growth in Active Diners, which increased from 7.0 million to 8.8 million at the end of each period, driving an increase in Daily Average Grubs to 324,600 during the three months ended March 31, 2017 from 267,800 Daily Average Grubs during the same peri od in 2016. The growth in Active Diners and Daily Average Grubs was due primarily to increased product and brand awareness largely as a result of marketing efforts and word-of-mouth referrals, better restaurant choices for diners in our markets, and technology and product improvements to drive more orders. In addition, revenue increased during the three months ended March 31, 2017 compared to the same period in 2016 due to a higher average order size, an increase in the Company’s average commission rates which was primarily driven by higher commission rates on delivery orders and an increase in non-delivery commission rates, as well as the inclusion of results from the Company’s acquisition of LABite (see Note 3, Acquisitions ).
Sales and Marketing
Sales and marketing expense increased by $6.6 million, or 23%, for the three months ended March 31, 2017 compared to the same period in 2016 . The increase was primarily attributable to an increase of $4.3 million in the Company’s advertising campaigns across various media channels, as well as a 25% growth in our sales and marketing teams and related salaries, benefits, payroll taxes, stock-based compensation expense, commissions and bonuses. Sales and marketing expense decreased to 23% of revenues during the three months ended March 31, 2017 from 26% in 2016.
Operations and Support
Operations and support expense increased by $24.5 million, or 70%, for the three months ended March 31, 2017 compared to the same period in 2016 . This increase was primarily attributable to expenses to support the 26% growth in Gross Food Sales and the related orders including expenses related to delivering orders, the inclusion of results from the acquisition of LABite, customer service
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and operations personnel c osts to support higher order volume and payment processing costs. Delivery expenses increased 185% during the three months ended March 31, 2017 compared to the prior year due to organic growth of the Company’s delivery network and the acquisition of LABite .
Technology (exclusive of amortization)
Technology expense increased by $3.0 million, or 29%, for the three months ended March 31, 2017 compared to the same period in 2016 . The increase was primarily attributable to 31% growth in the Company’s technology team, including salaries, benefits, payroll taxes, stock-based compensation expense and bonuses to support the growth and development of our platform .
General and Administrative
General and administrative expense decreased by $0.6 million, or 5%, for the three months ended March 31, 2017 compared to the same period in 2016 . The decrease was primarily attributable to lower stock-based compensation expense due to the impact of the accelerated vesting of restricted stock awards to certain terminated employees during the three months ended March 31, 2016.
Depreciation and Amortization
Depreciation and amortization expense increased by $2.7 million, or 37%, for the three months ended March 31, 2017 compared to the same period in 2016 . The increase was primarily attributable to higher depreciation and amortization expense related to an increase in capital spending on internally developed software, leasehold improvements, restaurant facing technology, furniture and office equipment to support the growth of the business and the amortization of intangible assets acquired in recent acquisitions.
Provision for Income Taxes
Income tax expense decreased by $0.1 million for the three months ended March 31, 2017 compared to the same period in 2016 . The decrease was primarily due to the decrease in the effective income tax rate from 43% to 29% during the respective periods, largely offset by the increase in income before provision for income taxes due to the factors described above. The current period effective tax rate was affected by the Company’s adoption of ASU No.  2016-09 , “Compensation – Stock Compensation (Topic 718), Improvements to Employee Share-Based Payment Accounting”(“ASU 2016-09”), during the first quarter of 2017, and, to a lesser extent, the reversal of a valuation allowance on certain state-only credits during the three months ended March 31, 2017. During the three months ended March 31, 2017, the Company recognized a discrete excess tax benefit from stock-based compensation of $1.9 million within provision for income taxes in the condensed consolidated statements of operations. The Company anticipates the potential for increased periodic volatility in future effective tax rates based on the continued application of the ASU  2016-09 . See Note 2, Significant Accounting Policies , for additional details.  The Company has provided income tax expense for the periods presented based on the expected annual effective tax rate as adjusted to reflect the tax impact of items discrete to the fiscal period .
Non-GAAP Financial Measure - Adjusted EBITDA
Adjusted EBITDA is a financial measure that is not calculated in accordance with GAAP. The Company defines Adjusted EBITDA as net income adjusted to exclude acquisition and restructuring costs, income taxes, depreciation and amortization and stock-based compensation expense. A reconciliation of Adjusted EBITDA to net income, the most directly comparable financial measure calculated and presented in accordance with GAAP, is provided below. Adjusted EBITDA should not be considered as an alternative to net income or any other measure of financial performance calculated and presented in accordance with GAAP. The Company’s Adjusted EBITDA may not be comparable to similarly titled measures of other organizations because other organizations may not calculate Adjusted EBITDA in the same manner. 
The Company included Adjusted EBITDA in this Quarterly Report on Form 10-Q because it is an important measure upon which management assesses the Company’s operating performance. The Company uses Adjusted EBITDA as a key performance measure because management believes it facilitates operating performance comparisons from period to period by excluding potential differences primarily caused by variations in capital structures, tax positions, the impact of acquisitions and restructuring, the impact of depreciation and amortization expense on the Company’s fixed assets and the impact of stock-based compensation expense. Because Adjusted EBITDA facilitates internal comparisons of the Company’s historical operating performance on a more consistent basis, the Company also uses Adjusted EBITDA for business planning purposes and in evaluating business opportunities and determining incentive compensation for certain employees. In addition, management believes Adjusted EBITDA and similar measures are widely used by investors, securities analysts, ratings agencies and other parties in evaluating companies in the industry as a measure of financial performance and debt-service capabilities. 
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The Company’s use of Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of the Company’s results as reported under GAAP. Some of these limitations are:
 	•	Adjusted EBITDA does not reflect the Company’s cash expenditures for capital equipment or other contractual commitments.	
 	•	Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect capital expenditure requirements for such replacements.	
 	•	Adjusted EBITDA does not reflect changes in, or cash requirements for, the Company’s working capital needs.	
 	•	Other companies, including companies in the same industry, may calculate Adjusted EBITDA differently, which reduces its usefulness as a comparative measure.	
In evaluating Adjusted EBITDA, you should be aware that in the future the Company will incur expenses similar to some of the adjustments in this presentation. The presentation of Adjusted EBITDA should not be construed as indicating that the Company’s future results will be unaffected by these expenses or by any unusual or non-recurring items. When evaluating the Company’s performance, you should consider Adjusted EBITDA alongside other financial performance measures, including net income and other GAAP results.
The following table sets forth Adjusted EBITDA and a reconciliation to net income for each of the periods presented below:
 
 	Three Months Ended March 31,	 	
 	2017	 	 	2016	 	
 	(in thousands)	 	
Net income	$	17,715	 	 	$	9,933	 	
Income taxes	 	7,270	 	 	 	7,398	 	
Depreciation and amortization	 	10,040	 	 	 	7,308	 	
EBITDA	 	35,025	 	 	 	24,639	 	
Acquisition and restructuring costs (a)	 	409	 	 	 	831	 	
Stock-based compensation	 	7,243	 	 	 	6,901	 	
Adjusted EBITDA	$	42,677	 	 	$	32,371	 	
(a)	Acquisition and restructuring costs include transaction and integration-related costs, such as legal and accounting costs, associated with the acquisitions and restructuring initiatives.	
 
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 2017, the Company had cash and cash equivalents of $275.0 million consisting of cash, money market funds, and commercial paper with original maturities of three months or less and short term investments of $86.2 million consisting of commercial paper and U.S. and non-U.S.-issued corporate debt securities with original maturities greater than three months, but less than one year. The Company generates a significant amount of cash flows from operations and has access to a secured revolving credit facility as necessary.
Amounts deposited with third-party financial institutions exceed Federal Deposit Insurance Corporation and Securities Investor Protection insurance limits, as applicable. These cash, cash equivalents and short term investments balances could be affected if the underlying financial institutions fail or if there are other adverse conditions in the financial markets. The Company has not experienced any loss or lack of access to its invested cash, cash equivalents or short term investments; however, such access could be adversely impacted by conditions in the financial markets in the future.
Management believes that the Company’s existing cash, cash equivalents, short term investments and available credit facility will be sufficient to meet its working capital requirements for at least the next twelve months. However, the Company’s liquidity assumptions may prove to be incorrect, and the Company could utilize its available financial resources sooner than currently expected. The Company’s future capital requirements and the adequacy of available funds will depend on many factors, including those set forth in “ Cautionary Statement Regarding Forward-Looking Statements” below. If the Company is unable to obtain needed additional funds, it will have to reduce operating costs, which could impair the Company’s growth prospects and could otherwise negatively impact its business.
 For most orders, diners use a credit card to pay for their meal when the order is placed. For these transactions, the Company collects the total amount of the diner’s order net of payment processing fees from the payment processor and remits the net proceeds
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to the restaurant less commission. Outstanding credit card receivables are generally settled with the payment processors within two to four business days. The Company generally accumulates funds and remits the net proceeds to the restaurants on at least a monthly basis. Restaurants have different contractual arrangements regarding payment frequency. They may be paid bi-weekly, weekly, monthly or, in some cases, more frequently when requested by the restaurant. The Company generally holds accumulated fund s prior to remittance to the restaurants in a non-interest bearing operating bank account that is used to fund daily operations, including the liability to the restaurants.  However, the Company is not restricted from earning investment income on these fun ds under its restaurant contract terms and has made short-term investments of proceeds in excess of the restaurant liability as described above.
Seasonal fluctuations in the Company’s business may also affect the timing of cash flows. In metropolitan markets, the Company generally experiences a relative increase in diner activity from September to April and a relative decrease in diner activity from May to August. In addition, the Company benefits from increased order volume in its campus markets when school is in session and experiences a decrease in order volume when school is not in session, during summer breaks and other vacation periods. Diner activity can also be impacted by colder or more inclement weather, which typically increases order volume, and warmer or sunny weather, which typically decreases order volume. These changes in diner activity and order volume have a direct impact on operating cash flows. While management expects this seasonal cash flow pattern to continue, changes in the Company’s business model could affect the timing or seasonal nature of its cash flows.
 
On January 22, 2016, the Company’s Board of Directors approved a program that authorizes the repurchase of up to $100 million of the Company’s common stock exclusive of any fees, commissions or other expenses relating to such repurchases through open market purchases or privately negotiated transactions at the prevailing market price at the time of purchase. The repurchase program was announced on January 25, 2016. The repurchased stock may be retired or held as authorized but unissued treasury shares. The repurchase authorizations do not obligate the Company to acquire any particular amount of common stock or adopt any particular method of repurchase and may be modified, suspended or terminated at any time at management’s discretion. Repurchased and retired shares will result in an immediate reduction of the outstanding shares used to calculate the weighted-average common shares outstanding for basic and diluted net income per share at the time of the transaction. During the three months ended March 31, 2017, the Company did not repurchase any of its common stock. During the three months ended March 31, 2016, the Company repurchased and retired 506,673 shares of our common stock at a weighted-average share price of $19.26, or an aggregate of $9.8 million.
On April 29, 2016, the Company entered into a secured revolving credit facility (the “Credit Agreement”), which provides for aggregate revolving loans up to $185.0 million, subject to an increase of up to an additional $30 million under certain conditions. The credit facility will be available to the Company until April 28, 2021. The Credit Agreement will be used for general corporate purposes, including funding working capital and acquisitions. There were no borrowings outstanding under the Credit Agreement as of March 31, 2017.
 
The Credit Agreement contains customary covenants that, among other things, require the Company to satisfy certain financial covenants and may restrict the Company’s ability to incur additional debt, pay dividends and make distributions, make certain investments and acquisitions, create liens, transfer and sell material assets and merge or consolidate. The Company was in compliance with the covenants of the Credit Agreement as of March 31, 2017 and expects to remain in compliance for the foreseeable future.
The following table sets forth certain cash flow information for the periods presented:
 
 	Three Months Ended March 31,	 	
 	2017	 	 	2016	 	
 	(in thousands)	 	
Net cash provided by operating activities	$	51,590	 	 	$	18,666	 	
Net cash provided by (used in) investing activities	 	(14,065	)	 	 	14,375	 	
Net cash provided by (used in) financing activities	 	(2,104	)	 	 	1,169	 	
 
Cash Flows Provided by Operating Activities
For the three months ended March 31, 2017, net cash provided by operating activities was $51.6 million compared to $18.7 million for the same period in 2016. The increase in cash flows from operations was driven primarily by changes in the Company’s operating assets and liabilities and an increase of $7.8 million of net income. During the three months ended March 31, 2017 and 2016, significant changes in the Company’s operating assets and liabilities, net of the effects of business acquisitions, resulted from the following:
 	•	an increase in accounts receivable of $1.7 million primarily due to the timing of processor payments to the Company at quarter-end for the three months ended March 31, 2017 compared to an increase of $10.0 million for the three months ended March 31, 2016;	
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 	•	an increase in accounts payable of $0.5 million for the three months ended March 31, 2017 due to timing of payments compared to a decrease of $5.4 million for the three months ended March 31, 2016;	
 	•	an increase in accrued expenses of $8.3 million during the three months ended March 31, 2017, primarily related to an increase in advertising bills and taxes payable, compared to an increase of $2.8 million during the three months ended March 31, 2016;	
 	•	a decrease in prepaid expenses of $3.0 million for the three months ended March 31, 2017 primarily related to a decrease in prepaid application hosting and insurance compared to an increase of $0.1 million for the three months ended March 31, 2016; and	
 	•	an increase in the restaurant food liability of $11.3 million for the three months ended March 31, 2017 due to growth in our business and the timing of payments compared to an increase of $10.1 million for the three months ended March 31, 2016.	
Cash Flows Used in Investing Activities
The Company’s investing activities during the periods presented consisted primarily of purchases of and proceeds from maturities of short-term investments, acquisitions of intangible assets, website and internal-use software development, and the purchase of property and equipment to support the growth of the business. 
For the three months ended March 31, 2017, net cash used in investing activities was $14.1 million compared to net cash provided by investing activities of $14.4 million for the same period in the prior year. The increase in net cash used in investing activities during the three months ended March 31, 2017 was primarily the result of a decrease in proceeds from maturities of short-term investments of $20.8 million, an increase in the acquisition of other intangible assets of $4.8 million related to the payments made to Zoomer (see Note 5, Goodwill and Acquired Intangible Assets , for additional details), an increase in website and internal-use software development costs of $1.8 million, and an increase in purchases of short-term investments of $1.6 million.
Cash Flows Used in Financing Activities
The Company’s financing activities during the periods presented consisted primarily of excess tax benefits related to stock-based compensation, repurchases of common stock, taxes paid related to net settlement of stock-based compensation awards and proceeds from the exercise of stock options. 
For the three months ended March 31, 2017, net cash used in financing activities was $2.1 million compared to net cash provided by financing activities of $1.2 million for the three months ended March 31, 2016 . The increase in net cash used in financing activities during the three months ended March 31, 2017 as compared to the same period in the prior year primarily resulted from the change in how excess tax benefits related to stock-based compensation are presented on the statement of cash flows due to the adoption of ASU 2016-09 in the first quarter of 2017. During the three months ended March 31, 2016, excess tax benefits of $10.6 million were presented within financing activities on the statement of cash flows, whereas excess tax benefits of $1.9 million were recognized within net income during the three months ended March 31, 2017 (see Note 2, Significant Accounting Policies , for additional details). The increase in net cash used in financing activities was also due to an increase in taxes paid related to net share settlement of stock-based compensation awards of $3.0 million, partially offset by a decrease in repurchases of the Company’s common stock of $9.8 million.
Acquisitions
 
On May 5, 2016, the Company acquired LABite for $65.8 million in cash, net of cash acquired of $2.6 million.
Quantitative and Qualitative Disclosures about Market Risk
The Company is exposed to certain market risks in the ordinary course of business. These risks primarily consist of interest rate fluctuations, inflation rate risk and other market related risks as follows:
Interest Rate Risk
The Company did not have any long-term borrowings as of March 31, 2017. The Company will be exposed to interest rate risk on variable-rate debt drawn under the Credit Agreement described above. The Company does not use interest rate derivative instruments to manage exposure to interest rate changes.
23

The Company invests its excess cash primarily in money market accounts, commercial paper and U.S. and non-U.S.-issued corporate debt securities. The Company intends to hold its investments to maturity. The Company’s current investment strat egy seeks first to preserve principal, second to provide liquidity for its operating and capital needs and third to maximize yield without putting principal at risk. The Company does not enter into investments for trading or speculative purposes.
The Company’s investments are exposed to market risk due to the fluctuation of prevailing interest rates that may reduce the yield on its investments or their fair value. The Company assesses market risk utilizing a sensitivity analysis that measures the potential change in fair values, interest income and cash flows. As the Company’s investment portfolio is short-term in nature, management does not believe an immediate 100 basis point increase in interest rates would have a material effect on the fair value of the Company’s portfolio, and therefore does not expect the Company’s results of operations or cash flows to be materially affected to any degree by a sudden change in market interest rates. In the unlikely event that the Company would need to sell its investments prior to their maturity, any unrealized gains and losses arising from the difference between the amortized cost and the fair value of the investments at that time would be recognized in the condensed consolidated statements of operations. See Note 4, Marketable Securities, to the accompanying Notes to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional details.
Inflation Risk
Management does not believe that inflation has had a material effect on the Company’s business, results of operations or financial condition.
Risks Related to Market Conditions
 The Company performs its annual goodwill impairment tests as of September 30, or more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of the Company below its carrying value. Such indicators may include the following, among others: a significant decline in expected future cash flows, a sustained, significant decline in the Co  mpany’s stock price and market capitalization, a significant adverse change in legal factors or in the business climate, unanticipated competition, the testing for recoverability of a significant asset group and slower growth rates. Any adverse change in these factors could have a significant impact on the recoverability of the Company’s goodwill and could have a material impact on the consolidated financial statements. Goodwill represents the excess of the purchase price of an acquired business over the fair value of the net assets acquired. As of March 31, 2017 , the Company had $436.5 million in goodwill.
As part of our interim review for indicators of impairment, management analyzed potential changes in value based on operating results for the three months ended March 31, 2017 compared to expected results. Management also considered how our market capitalization, business growth and other factors used in the September 30, 2016 impairment analysis, could be impacted by changes in market conditions and economic events. For example, the fair market value of our stock as of March 31, 2017 has decreased since September 30, 2016. Management considered these trends in performing its assessment of whether an interim impairment review was required. Based on this interim assessment, management concluded that as of March 31, 2017, there were no events or changes in circumstances that indicated it was more likely than not that our fair value was below our carrying value. Nevertheless, significant changes in global economic and market conditions could result in changes to expectations of future financial results and key valuation assumptions. Such changes could result in revisions of management’s estimates of our fair value and could result in a material impairment of goodwill.
OTHER INFORMATION
Off-Balance Sheet Arrangements
The Company did not have any off-balance sheet arrangements as of March 31, 2017.
Contractual Obligations
There were no material changes to the Company’s commitments under contractual obligations as compared to the contractual obligations disclosed in the 2016 Form 10-K.
Contingencies
For a discussion of certain litigation involving the Company, see Note 7,  Commitments and Contingencies,  to the accompanying Notes to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
24

New Accounting Pronouncements and Pending Accounting Standards
See Note 2,  Significant Accounting Policies , to the accompanying Notes to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for pending standards and their estimated effect on the Company’s consolidated financial statements and accounting standards adopted during the three months ended March 31, 2017.
Critical Accounting Policies and Estimates
The condensed consolidated financial statements are prepared in accordance with GAAP. The preparation of these condensed consolidated financial statements requires the Company to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses, and related disclosures. These estimates form the basis for judgments management makes about the carrying values of the Company’s assets and liabilities, which are not readily apparent from other sources. The Company bases its estimates and judgments on historical experience and on various other assumptions that management believes are reasonable under the circumstances. On an ongoing basis, the Company evaluates its estimates and assumptions. Actual results may differ from these estimates under different assumptions or conditions.
The Company believes that the assumptions and estimates associated with revenue recognition, website and software development costs, recoverability of intangible assets with definite lives and other long-lived assets, stock-based compensation, goodwill and income taxes have the greatest potential impact on the condensed consolidated financial statements. Therefore, these are considered to be the Company’s critical accounting policies and estimates.
Other than the changes disclosed in Note 2 , Significant Accounting Policies , in the accompanying Notes to the Condensed Consolidated Financial Statements included in Part I, Item I of this Quarterly Report on Form 10-Q, there have been no material changes to the Company’s critical accounting policies and estimates as compared to the critical accounting policies and estimates described in in the 2016 Form 10-K.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
In this section and elsewhere in this Quarterly Report on Form 10-Q, we discuss and analyze the results of operations and financial condition of the Company.  In addition to historical information about the Company, we also make statements relating to the future called “forward-looking statements,” which are provided under the “safe harbor” of the U.S. Private Securities Litigation Act of 1995.  Forward-looking statements involve substantial risks, known or unknown, and uncertainties that may cause actual results to differ materially from future results or outcomes expressed or implied by such forward-looking statements. Forward-looking statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as “anticipates,” “believes,” “contemplates,” “continue,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,” “target” or “will” or the negative of these words or other similar terms or expressions that concern the Company’s expectations, strategy, plans or intentions.
We cannot guarantee that any forward-looking statement will be realized. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including the following important factors, in addition to those discussed elsewhere in this Quarterly Report on Form 10-Q, in Part I, Item 1A, Risk Factors , of the 2016 Form 10-K and Part II, Item 1A, Risk Factors , in subsequent quarterly reports, that could affect the future results of the Company and could cause those results or other outcomes to differ materially from those expressed or implied in the Company’s forward-looking statements:
 	•	our ability to accurately forecast revenue and appropriately plan expenses ;	
 	•	our ability to effectively assimilate, integrate and maintain acquired businesses;	
 	•	our ability to attract and retain restaurants to use the Company’s platform in a cost effective manner;	
 	•	our ability to maintain, protect and enhance our brand in an effort to increase the number of and retain existing diners and their level of engagement using the Company’s websites and mobile applications;	
 	•	our ability to strengthen the Company’s two-sided network;	
 	•	the impact of interruptions or disruptions to our service on our business, reputation or brand;	
 	•	our ability to choose and effectively manage third-party service providers;	
 	•	the seasonality of our business, including the effect of academic calendars on college campuses and seasonal patterns in restaurant dining;	
 	•	our ability to generate positive cash flow and achieve and maintain profitability;	
25

 	•	our ability to maintain an adequate rate of growth and effectively manage that growth;	
 	•	the impact of worldwide economic conditions, including the resulting effect on diner spending on takeout;	
 	•	the exposure to potential liability and expenses for legal claims and harm to our business;	
 	•	our ability to defend the classification of members of our delivery network as independent contractors;	
 	•	our ability to keep pace with technology changes in the takeout industry;	
 	•	our ability to grow the usage of the Company’s mobile applications and monetize this usage;	
 	•	our ability to properly use, protect and maintain the security of personal information and data provided by diners;	
 	•	the impact of payment processor costs and procedures;	
 	•	our ability to successfully compete with the traditional takeout ordering process and the effects of increased competition on our business;	
 	•	our ability to innovate and provide a superior experience for restaurants and diners;	
 	•	our ability to successfully expand in existing markets and into new markets;	
 	•	our ability to attract and retain qualified employees and key personnel;	
 	•	our ability to grow our restaurant delivery services in an effective and cost efficient manner;	
 	•	the impact of weather and the effects of natural or man-made catastrophic events on the Company’s business;	
 	•	our ability to maintain, protect and enhance the Company’s intellectual property;	
 	•	our ability to obtain capital to support business growth;	
 	•	our ability to comply with the operating and financial covenants of our secured, revolving credit facility; and	
 	•	our ability to comply with modified or new legislation and governmental regulations affecting our business.	
While forward-looking statements are our best prediction at the time they are made, you should not rely on them.  Forward-looking statements speak only as of the date of this document or the date of any document that may be incorporated by reference into this document.
Consequently, you should consider forward-looking statements only as the Company’s current plans, estimates and beliefs. The Company does not undertake and specifically declines any obligation to publicly update or revise forward-looking statements, including those set forth in this Quarterly Report on Form 10-Q, to reflect any new events, information, events or any change in conditions or circumstances unless required by law.  You are advised, however, to consult any further disclosures we make on related subjects in our Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and Annual Reports on Form 10-K and our other filings with the SEC.
 
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
See Part I, Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resource – Quantitative and Qualitative Disclosures About Market Risk, of this Quarterly Report on Form 10-Q.

 Item 4. Controls and Procedures
Disclosure controls and procedures.
As required by Rule 13a-15(b) and Rule 15d-15(e) of the Exchange Act, the Company’s management, including the Chief Executive Officer and Chief Financial Officer, is responsible for establishing and maintaining effective disclosure controls and procedures, as defined under Rules 13a-15(e) and 15d-15(e) of the Exchange Act. As of March 31, 2017 , an evaluation was performed under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that disclosure controls and procedures as of March 31, 2017 were effective in ensuring information required to be disclosed in the Company’s SEC reports was recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information was accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
26

Changes in internal control over financial reporting.
There have not been any changes in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended March 31, 2017 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

 PART II— OTHER INFORMATION
 
 Item 1. Legal Proceedings
For a description of the Company’s material pending legal proceedings, see Note 7,  Commitments and Contingencies , to the accompanying Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

 Item 1A. Risk Factors
There have been no material changes to the risk factors affecting our business, financial condition or future results from those set forth in Part I, Item 1A (Risk Factors) in the 2016 Form 10-K. However, you should carefully consider the factors discussed in the 2016 Form 10-K and in this Quarterly Report on Form 10-Q, which could materially affect our business, financial condition or future results. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.
 
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Unregistered Sales of Equity Securities
There were no sales of unregistered equity securities during the three months ended March 31, 2017.
Issuer Purchases of Equity Securities
On January 22, 2016, the Board of Directors of the Company approved a program (the “Repurchase Program”) that authorizes the repurchase of up to $100 million of the Company’s common stock exclusive of any fees, commissions or other expenses relating to such repurchases through open market purchases or privately negotiated transactions at the prevailing market price at the time of purchase. The Repurchase Program was announced on January 25, 2016. The repurchased stock may be retired or held as authorized but unissued treasury shares. The repurchase authorizations do not obligate the Company to acquire any particular amount of common stock or adopt any particular method of repurchase and may be modified, suspended or terminated at any time at the Company’s discretion. Repurchased and retired shares will result in an immediate reduction of the outstanding shares used to calculate the weighted-average common shares outstanding for basic and diluted net income per share at the time of the transaction.
During the three months ended March 31, 2017, the Company did not repurchase any of its common stock.
 
 Item 3. Defaults Upon Senior Securities
Not applicable
 Item 4. Mine Safety Disclosures
Not applicable
 Item 5. Other Information
None

27

 I tem 6: Exhibits
 
 	 	 	 	Incorporated by Reference	 	 	
Exhibit
No.	 	Description	 	Form	 	File No.	 	Exhibit	 	Filing Date	 	Filed
Herewith	

31.1	 	Certification of Matthew Maloney, Chief Executive Officer, pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	 	 	 	 	 	 	 	 	 	X	
 	 	 	 	 	 	 	 	 	 	 	 	 	
31.2	 	Certification of Adam DeWitt, Chief Financial Officer, pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	 	 	 	 	 	 	 	 	 	X	
 	 	 	 	 	 	 	 	 	 	 	 	 	
32.1	 	Certification of Matthew Maloney, Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	 	 	 	 	 	 	 	 	 	X	
 	 	 	 	 	 	 	 	 	 	 	 	 	
32.2	 	Certification of Adam DeWitt, Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	 	 	 	 	 	 	 	 	 	X	
 	 	 	 	 	 	 	 	 	 	 	 	 	
101.INS	 	XBRL Instance Document.	 	 	 	 	 	 	 	 	 	X	
 	 	 	 	 	 	 	 	 	 	 	 	 	
101.SCH	 	XBRL Taxonomy Extension Schema Document.	 	 	 	 	 	 	 	 	 	X	
 	 	 	 	 	 	 	 	 	 	 	 	 	
101.CAL	 	XBRL Taxonomy Extension Calculation Linkbase Document.	 	 	 	 	 	 	 	 	 	X	
 	 	 	 	 	 	 	 	 	 	 	 	 	
101.DEF	 	XBRL Taxonomy Extension Definition Linkbase Document.	 	 	 	 	 	 	 	 	 	X	
 	 	 	 	 	 	 	 	 	 	 	 	 	
101.LAB	 	XBRL Taxonomy Extension Labels Linkbase Document.	 	 	 	 	 	 	 	 	 	X	
 	 	 	 	 	 	 	 	 	 	 	 	 	
101.PRE	 	XBRL Taxonomy Extension Presentation Linkbase Document.	 	 	 	 	 	 	 	 	 	X	

 	 	 	 	 	 	 	 	 	 	 	 	 	

 
 
28

 S IGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
GRUBHUB INC.	
   	 	
By:	   	/s/ Matthew Maloney	
   	   	Matthew Maloney	
   	   	Chief Executive Officer and Director
(Principal Executive Officer)	
 	 	 	
By:	   	/s/ Adam DeWitt	
   	   	Adam DeWitt	
   	   	Chief Financial Officer and Treasurer
(Principal Financial Officer and Principal Accounting Officer)	
Date: May 9, 2017
29

EXHIBIT 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO RULES 13a-14(a) AND 15d-14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Matthew Maloney, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of GrubHub Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

By:	   	/S/ Matthew Maloney	
   	   	Matthew Maloney	
   	   	Chief Executive Officer and Director	
 
Date: May 9, 2017

 
EXHIBIT 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO RULES 13a-14(a) AND 15d-14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Adam DeWitt, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of GrubHub Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

By:	   	/S/ Adam DeWitt	
   	   	Adam DeWitt	
   	   	Chief Financial Officer and Treasurer	
 
Date: May 9, 2017

 
EXHIBIT 32.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. 1350,
AS ADOPTED PURSUANT TOSECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of GrubHub Inc. (the “Company”) on Form 10-Q for the fiscal quarter ended March 31, 2017 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Matthew Maloney, Chief Executive Officer and Director of the Company, certify, as of the date hereof and solely for purposes of and pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge: 
 	1.	The Report fully complies with the requirements of section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and	
 	2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods indicated.	

By:	   	/S/ Matthew Maloney	
   	   	Matthew Maloney	
   	   	Chief Executive Officer and Director	

Date: May 9, 2017

 
EXHIBIT 32.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. 1350,
AS ADOPTED PURSUANT TOSECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of GrubHub Inc. (the “Company”) on Form 10-Q for the fiscal quarter ended March 31, 2017 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Adam DeWitt, Chief Financial Officer and Treasurer of the Company, certify, as of the date hereof and solely for purposes of and pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge: 
 	1.	The Report fully complies with the requirements of section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and	
 	2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods indicated.	

By:	   	/S/ Adam DeWitt	
   	   	Adam DeWitt	
   	   	Chief Financial Officer and Treasurer	

Date: May 9, 2017