UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549  
 
FORM 8-K  
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 25, 2018  
 
GRUBHUB INC.
(Exact name of Registrant as Specified in Its Charter)  

Delaware	 	001-36389	 	46-2908664	
(State or Other Jurisdiction
of Incorporation)	 	(Commission File Number)	 	(IRS Employer
Identification No.)	
 	 	 	
111 W. Washington Street, Suite 2100,
Chicago, Illinois	 	 	 	60602	
(Address of Principal Executive Offices)	 	 	 	(Zip Code)	
 
Registrant’s Telephone Number, Including Area Code: (877) 585-7878
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)  
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):
☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)	
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)	
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))	
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))	
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.     ☐

 

Item 2.0 2.   Results of Operations and Financial Condition
On May 1, 2018, Grubhub Inc. (the “ Company ”) issued a press release announcing the Company’s financial results for the first quarter ended March 31, 2018. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
The information in this Item 2.02, including Exhibit 99.1, is intended to be furnished pursuant to Item 2.02 of Form 8-K, “Results of Operations and Financial Condition” and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (“ Exchange Act ”), or otherwise subject to the liabilities of that section, nor  shall it be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
 
Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
 
Effective as of April 25, 2018, in connection with the closing of the previously disclosed Investment (as defined below), the Board of Directors (the “ Board ”) of the Company has increased the size of the Board from nine to ten members and appointed Arthur Francis Starrs, III to the Board as a Class III director.  As a Class III director, Mr. Starrs will serve on the Board until the Company’s 2020 annual meeting of stockholders and until his successor is duly elected and qualified.  In accordance with the terms of the Investment Agreement (as defined below), so long as the Investor (as defined below) and its affiliates beneficially own at least 50% of the Acquired Shares (as defined below), the Master Services Agreement, dated February 8, 2018, by and among the Company, the Investor, Taco Bell Corp., KFC Corporation and Pizza Hut, LLC has not been terminated and Yum! Brands, Inc. and its subsidiaries have not invested in specified competitors of the Company, the Investor will have the right to designate one person for election to the Board.  The Board has affirmatively determined that Mr. Starrs is independent under the applicable rules and regulations of the Securities and Exchange Commission and the listing standards of the New York Stock Exchange.
 
Pursuant to the terms of the Investment Agreement, Mr. Starrs will not participate in the Company’s compensation and benefit programs in which the Company’s other independent directors participate, other than to receive the benefits of indemnification and insurance consistent with the other independent directors.
There are no family relationships between Mr. Starrs and any officer or other director of the Company or any related party transactions involving Mr. Starrs and the Company.  In addition, Mr. Starrs has not been employed at the Company or any of its subsidiaries.
 
 Mr. Starrs will have all of the obligations, including fiduciary duties to the Company and its stockholders, of a director under applicable law and pursuant to the Company’s organizational documents.
 
Item 8.01. Other Events.
 
On April 25, 2018, the Company and Yum Restaurant Services Group, LLC (the “ Investor ”), a wholly owned subsidiary of Yum! Brands, Inc., closed the previously announced issuance and sale of 2,820,464 shares of common stock of the Company (the “ Acquired Shares ”) to the Investor for an aggregate purchase price of $200,000,000 (the “ Investment ”), pursuant to the Investment Agreement, dated as of February 7, 2018, by and between the Company and the Investor (the “ Investment Agreement ”).
 
Item 9.01.   Financial Statements and Exhibits
(d) Exhibits
 
Exhibit
Number	  	Description	
 	 	
99.1	  	Press Release issued by Grubhub Inc. on May 1, 2018.	

 

 
EXHIBIT INDEX
 
Exhibit
Number	  	Description	
 	 	 	
99.1	  	Press Release issued by Grubhub Inc. on May 1, 2018.	

 

 
 
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
 	 	 	 	 	GRUBHUB INC.	
 	 	 	 	 	
Date: May 1, 2018	 	 	 	 	By:	 	/s/ Adam DeWitt	
 	 	 	 	 	 	 	Adam DeWitt	
 	 	 	 	 	 	 	Chief Financial Officer	

 

 
Exhibit 99.1
 
GRUBHUB REPORTS RECORD FIRST QUARTER RESULTS
 
Grubhub generates 49% revenue growth in the first quarter
 
CHICAGO, May 1, 2018 – Grubhub Inc. (NYSE: GRUB), the nation’s leading online and mobile food-ordering and delivery marketplace, today announced financial results for the first quarter ended March 31, 2018. For the first quarter, the Company posted revenues of $232.6 million, which is a 49% year-over-year increase from $156.1 million in the first quarter of 2017. Gross Food Sales grew 39% year-over-year to $1.2 billion, up from $898 million in the year ago period.
 
"Our team executed well in the first quarter, making meaningful progress toward our most significant goals for 2018. We’ve already launched dozens of new delivery markets, completed our Yelp and Eat24 integrations a quarter earlier than expected, and attracted a record quarterly number of organic new diners," said Grubhub CEO, Matt Maloney. "Our restaurant partnerships are broader and deeper than ever before, increasing our value to diners and driving sustained diner and order growth.”
 
First Quarter 2018 Highlights
 
The following results reflect the financial performance and key operating metrics of our business for the three months ended March 31, 2018, as compared to the same period in 2017.
 
First Quarter Financial Highlights
 
 	•	Revenues: $232.6 million, a 49% year-over-year increase from $156.1 million in the first quarter of 2017.	
 	•	Net Income: $30.8 million, or $0.34 per diluted share, a 74% year-over-year increase from $17.7 million, or $0.20 per diluted share, in the first quarter of 2017.	
 	•	Non-GAAP Adjusted EBITDA: $64.1 million, a 51% year-over-year increase from $42.5 million in the first quarter of 2017.	
 	•	Non-GAAP Net Income: $47.2 million, or $0.52 per diluted share, an 88% year-over-year increase from $25.1 million, or $0.29 per diluted share, in the first quarter of 2017.	
 
First Quarter Key Business Metrics Highlights
 
 	•	Active Diners were 15.1 million, a 72% year-over-year increase from 8.8 million Active Diners in the first quarter of 2017.	
 	•	Daily Average Grubs (DAGs) were 436,900, a 35% year-over-year increase from 324,600 DAGs in the first quarter of 2017.	
 	•	Gross Food Sales were $1.2 billion, a 39% year-over-year increase from $898 million in the first quarter of 2017.	

 
 
"Organic DAG growth accelerated for the second quarter in a row, fueled by the most comprehensive restaurant marketplace and our efficient delivery," said Grubhub President and CFO Adam DeWitt. "Our scale continues to generate improving profitability, leading to record EBITDA per order of $1.63 during the first quarter, even as we push hard on delivery market expansion and spreading diner awareness."
 
Second Quarter and Full Year 2018 Guidance
 
Based on information available as of May 1, 2018, the Company is providing the following financial guidance for the second quarter and full year of 2018:
 
 	Second Quarter 2018	 	Full Year 2018	
 	(in millions)	
Expected Revenue range	$228 - $236	 	$930 - $965	
Expected Adjusted EBITDA range	$59 - $65	 	$242 - $262	

First Quarter 2018 Financial Results Conference Call  
Grubhub will webcast a conference call today at 9 a.m. CT to discuss the first quarter 2018 financial results. The webcast can be accessed on the Grubhub Investor Relations website at http://investors.grubhub.com, along with the Company's earnings press release and financial tables. A replay of the webcast will be available at the same website until May 15, 2018.
About Grubhub
 Grubhub (NYSE: GRUB) is the nation’s leading online and mobile takeout food-ordering marketplace with the largest and most comprehensive network of restaurant partners, as well as the largest diner base. Dedicated to connecting diners with the food they love from their favorite local restaurants, Grubhub strives to elevate food ordering through innovative restaurant technology, easy-to-use platforms and an improved delivery experience. Grubhub is proud to work with more than 80,000 restaurant partners in over 1,600 U.S. cities and London. The Grubhub portfolio of brands includes Grubhub, Seamless, Eat24, AllMenus and MenuPages.
Use of Forward Looking Statements
 This press release contains forward-looking statements regarding Grubhub, “the Company’s” or our management's future expectations, beliefs, intentions, goals, strategies, plans and prospects, including the expected benefits to, and financial performance of, Grubhub following the acquisition of Eat24 and its commercial agreements with Yelp and Yum! Brands. Such statements constitute “forward-looking statements”, which are subject to the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve substantial known and unknown risks, uncertainties and assumptions that could cause actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by the forward-looking statements. Such risks and uncertainties include, but are not limited to, the matters set forth in the filings that we make with the Securities and Exchange Commission from time to time, including those set forth in the section entitled “Risk Factors” in our Annual Report on Form 10-K filed on February 28, 2018, which is on file with the SEC and is available on the Investor Relations section of our website at http://investors.grubhub.com. Additional information will be set forth in our Quarterly Report on Form 10-Q that will be filed for the quarter ended March 31, 2018, which should be read in conjunction with these financial results. Please also note that forward-looking statements represent management's beliefs and assumptions only as of the date of this press release. Except as required by law, we disclaim any intention to, and undertake no obligation to, publicly update these forward-looking statements, or to update the reasons actual results could differ

materially from those anticipated in the forward-looking statements, even if new information becomes available in the future.
 
Use of Non-GAAP Financial Measures
Adjusted EBITDA, non-GAAP net income and non-GAAP net income per diluted share attributable to common stockholders are financial measures that are not calculated in accordance with accounting principles generally accepted in the United States, or GAAP.
 
We define Adjusted EBITDA as net income adjusted to exclude acquisition, restructuring and certain legal costs, income taxes, interest income and expense, depreciation and amortization and stock-based compensation expense. Non-GAAP net income and non-GAAP net income per diluted share attributable to common stockholders exclude acquisition, restructuring and certain legal costs, amortization of acquired intangible assets, stock-based compensation expense and other nonrecurring items as well as the income tax effects of these non-GAAP adjustments. We use these non-GAAP financial measures as key performance measures because we believe they facilitate operating performance comparisons from period to period by excluding potential differences primarily caused by variations in capital structures, tax positions, the impact of acquisitions, restructuring and certain legal costs, the impact of depreciation and amortization expense on our fixed assets and the impact of stock-based compensation expense. Adjusted EBITDA, non-GAAP net income and non-GAAP net income per diluted share attributable to common stockholders are not measurements of our financial performance under GAAP and should not be considered as an alternative to performance measures derived in accordance with GAAP.
 
See “Schedule of Non-GAAP Financial Measures Reconciliation” below for a reconciliation of net income to Adjusted EBITDA, non-GAAP net income and non-GAAP net income per diluted share attributable to common stockholders.

Contacts:
Dave Zaragoza
Corporate Finance & Investor Relations
ir@grubhub.com	 
Katie Norris
Press
press@grubhub.com	

 
 
GRUBHUB INC.
STATEMENTS OF OPERATIONS
(in thousands, except per share data)
 
 	Three Months Ended March 31,	 	
 	2018	 	 	2017	 	
Revenues	$	232,570	 	 	$	156,134	 	
Costs and expenses:	 	 	 	 	 	 	 	
Operations and support	 	96,283	 	 	 	59,519	 	
Sales and marketing	 	48,756	 	 	 	35,438	 	
Technology (exclusive of amortization)	 	17,331	 	 	 	13,192	 	
General and administrative	 	17,697	 	 	 	13,181	 	
Depreciation and amortization	 	20,951	 	 	 	10,040	 	
Total costs and expenses	 	201,018	 	 	 	131,370	 	
Income from operations	 	31,552	 	 	 	24,764	 	
Interest (income) expense - net	 	1,022	 	 	 	(221	)	
Income before provision for income taxes	 	30,530	 	 	 	24,985	 	
Income tax (benefit) expense	 	(236	)	 	 	7,270	 	
Net income attributable to common stockholders	$	30,766	 	 	$	17,715	 	
Net income per share attributable to common stockholders:	 	 	 	 	 	 	 	
Basic	$	0.35	 	 	$	0.21	 	
Diluted	$	0.34	 	 	$	0.20	 	
Weighted-average shares used to compute net income per share attributable to common stockholders:	 	 	 	 	 	 	 	
Basic	 	87,085	 	 	 	85,874	 	
Diluted	 	90,091	 	 	 	87,120	 	
 
KEY OPERATING METRICS
 
 	 	 	Three Months Ended March 31,	 	 	
  	 	 	2018	 	 	2017	 	 	
Active Diners (000s)	 	 	 	15,078	 	 	 	8,751	 	 	
Daily Average Grubs	 	 	 	436,900	 	 	 	324,600	 	 	
Gross Food Sales (millions)	 	 	$	1,245.0	 	 	$	898.1	 	 	

 
GRUBHUB INC.	 	
CONSOLIDATED BALANCE SHEETS	 	
(in thousands, except share data)	 	

 	 	 	 	 	 	 	 	
 	March 31, 2018	 	 	December 31, 2017	 	
ASSETS	 	 	 	 	 	 	 	
CURRENT ASSETS:	 	 	 	 	 	 	 	
Cash and cash equivalents	$	272,258	 	 	$	234,090	 	
Short-term investments	 	16,052	 	 	 	23,605	 	
Accounts receivable, less allowances for doubtful accounts	 	100,129	 	 	 	95,970	 	
Prepaid expenses and other current assets	 	9,847	 	 	 	6,818	 	
Total current assets	 	398,286	 	 	 	360,483	 	
PROPERTY AND EQUIPMENT:	 	 	 	 	 	 	 	
Property and equipment, net of depreciation and amortization	 	79,399	 	 	 	71,384	 	
OTHER ASSETS:	 	 	 	 	 	 	 	
Other assets	 	6,697	 	 	 	6,487	 	
Goodwill	 	589,862	 	 	 	589,862	 	
Acquired intangible assets, net of amortization	 	504,011	 	 	 	515,553	 	
Total other assets	 	1,100,570	 	 	 	1,111,902	 	
TOTAL ASSETS	$	1,578,255	 	 	$	1,543,769	 	
LIABILITIES AND STOCKHOLDERS’ EQUITY	 	 	 	 	 	 	 	
CURRENT LIABILITIES:	 	 	 	 	 	 	 	
Restaurant food liability	$	126,853	 	 	$	119,922	 	
Accounts payable	 	12,202	 	 	 	7,607	 	
Accrued payroll	 	9,897	 	 	 	13,186	 	
Taxes payable	 	1,514	 	 	 	3,109	 	
Short-term debt	 	4,688	 	 	 	3,906	 	
Other accruals	 	34,237	 	 	 	26,818	 	
Total current liabilities	 	189,391	 	 	 	174,548	 	
LONG-TERM LIABILITIES:	 	 	 	 	 	 	 	
Deferred taxes, non-current	 	71,316	 	 	 	74,292	 	
Other accruals	 	17,207	 	 	 	7,468	 	
Long-term debt	 	143,121	 	 	 	169,645	 	
Total long-term liabilities	 	231,644	 	 	 	251,405	 	
STOCKHOLDERS’ EQUITY:	 	 	 	 	 	 	 	
Common stock, $0.0001 par value	 	9	 	 	 	9	 	
Accumulated other comprehensive loss	 	(872	)	 	 	(1,228	)	
Additional paid-in capital	 	856,443	 	 	 	849,043	 	
Retained earnings	 	301,640	 	 	 	269,992	 	
Total Stockholders’ Equity	$	1,157,220	 	 	$	1,117,816	 	
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	1,578,255	 	 	$	1,543,769	 	

 
GRUBHUB INC.	 	
CONSOLIDATED STATEMENTS OF CASH FLOWS	 	
(in thousands)	 	
 	 	 	 	 	 	 	 	 	
 	 	Three Months Ended March 31,	 	
 	 	2018	 	 	2017	 	
CASH FLOWS FROM OPERATING ACTIVITIES	 	 	 	 	 	 	 	 	
Net income	 	$	30,766	 	 	$	17,715	 	
Adjustments to reconcile net income to net cash from operating activities:	 	 	 	 	 	 	 	 	
Depreciation	 	 	5,050	 	 	 	2,412	 	
Provision for doubtful accounts	 	 	325	 	 	 	95	 	
Deferred taxes	 	 	(2,976	)	 	 	(4,741	)	
Amortization of intangible assets	 	 	15,901	 	 	 	7,628	 	
Stock-based compensation	 	 	10,231	 	 	 	7,243	 	
Deferred rent	 	 	1,633	 	 	 	58	 	
Amortization of deferred loan costs	 	 	333	 	 	 	124	 	
Other	 	 	(243	)	 	 	(234	)	
Change in assets and liabilities, net of the effects of business acquisitions:	 	 	 	 	 	 	 	 	
Accounts receivable	 	 	3,918	 	 	 	(1,721	)	
Prepaid expenses and other assets	 	 	(3,516	)	 	 	2,957	 	
Restaurant food liability	 	 	6,885	 	 	 	11,297	 	
Accounts payable	 	 	601	 	 	 	483	 	
Accrued payroll	 	 	(3,295	)	 	 	(1,534	)	
Other accruals	 	 	5,887	 	 	 	9,808	 	
Net cash provided by operating activities	 	 	71,500	 	 	 	51,590	 	
CASH FLOWS FROM INVESTING ACTIVITIES	 	 	 	 	 	 	 	 	
Purchases of investments	 	 	(10,537	)	 	 	(57,783	)	
Proceeds from maturity of investments	 	 	18,166	 	 	 	55,833	 	
Capitalized website and development costs	 	 	(6,262	)	 	 	(4,150	)	
Purchases of property and equipment	 	 	(5,462	)	 	 	(3,056	)	
Acquisitions of business, net of cash acquired	 	 	737	 	 	 	—	 	
Acquisition of other intangible assets	 	 	—	 	 	 	(5,000	)	
Other cash flows from investing activities	 	 	16	 	 	 	91	 	
Net cash used in investing activities	 	 	(3,342	)	 	 	(14,065	)	
CASH FLOWS FROM FINANCING ACTIVITIES	 	 	 	 	 	 	 	 	
Repayments of borrowings under the credit facility	 	 	(25,781	)	 	 	—	 	
Proceeds from exercise of stock options	 	 	6,948	 	 	 	1,584	 	
Taxes paid related to net settlement of stock-based compensation awards	 	 	(11,485	)	 	 	(3,688	)	
Net cash used in financing activities	 	 	(30,318	)	 	 	(2,104	)	
Net change in cash, cash equivalents, and restricted cash	 	 	37,840	 	 	 	35,421	 	
Effect of exchange rates on cash, cash equivalents and restricted cash	 	 	356	 	 	 	97	 	
Cash, cash equivalents, and restricted cash at beginning of year	 	 	238,239	 	 	 	242,214	 	
Cash, cash equivalents, and restricted cash at end of the period	 	$	276,435	 	 	$	277,732	 	
SUPPLEMENTAL DISCLOSURE OF NON-CASH ITEMS	 	 	 	 	 	 	 	 	
Cash paid for income taxes	 	$	227	 	 	$	746	 	

 
GRUBHUB INC.
NON-GAAP FINANCIAL MEASURES RECONCILIATION
(in thousands, except per share data)
 
 	Three Months Ended March 31,	 	 	
 	2018	 	 	2017	 	 	
Net income	$	30,766	 	 	$	17,715	 	 	
Income taxes	 	(236	)	 	 	7,270	 	 	
Interest (income) expense - net	 	1,022	 	 	 	(221	)	 	
Depreciation and amortization	 	20,951	 	 	 	10,040	 	 	
EBITDA	 	52,503	 	 	 	34,804	 	 	
Acquisition, restructuring and legal costs	 	1,329	 	 	 	409	 	 	
Stock-based compensation	 	10,231	 	 	 	7,243	 	 	
Adjusted EBITDA	$	64,063	 	 	$	42,456	 	 	
 
 	Three Months Ended March 31,	 	 	
 	2018	 	 	2017	 	 	
Net income	$	30,766	 	 	$	17,715	 	 	
Stock-based compensation	 	10,231	 	 	 	7,243	 	 	
Amortization of acquired intangible assets	 	11,543	 	 	 	5,273	 	 	
Acquisition, restructuring and legal costs	 	1,329	 	 	 	409	 	 	
Income tax adjustments	 	(6,677	)	 	 	(5,519	)	 	
Non-GAAP net income	$	47,192	 	 	$	25,121	 	 	
Weighted-average diluted shares used to compute net income per share attributable to common stockholders	 	90,091	 	 	 	87,120	 	 	
Non-GAAP net income per diluted share attributable to common stockholders	$	0.52	 	 	$	0.29	 	 	
 
 	Guidance	 	
 	Three Months Ended
June 30, 2018	 	 	Year Ended
December 31, 2018	 	
 	Low	 	 	High	 	 	Low	 	 	High	 	
 	(in millions)	 	
Net income	$	19.5	 	 	$	23.8	 	 	$	79.8	 	 	$	94.2	 	
Income taxes	 	7.5	 	 	 	9.2	 	 	 	30.9	 	 	 	36.5	 	
Interest expense ̶ net	 	1.0	 	 	 	1.0	 	 	 	4.0	 	 	 	4.0	 	
Depreciation and amortization	 	19.0	 	 	 	19.0	 	 	 	80.0	 	 	 	80.0	 	
EBITDA	 	47.0	 	 	 	53.0	 	 	 	194.7	 	 	 	214.7	 	
Acquisition and restructuring costs	 	—	 	 	 	—	 	 	 	1.3	 	 	 	1.3	 	
Stock-based compensation	 	12.0	 	 	 	12.0	 	 	 	46.0	 	 	 	46.0	 	
Adjusted EBITDA	$	59.0	 	 	$	65.0	 	 	$	242.0	 	 	$	262.0