GrubHub Still Hungry for Deals to Stave Off Amazon, Uber

Online food delivery company GrubHub Inc forecast current-quarter revenue above estimates and said it would look at buying smaller rivals to reach more customers and add restaurants to its network.

Shares of the company, which reported better-than-expected quarterly results, rose as much as 10 percent Wednesday morning.

GrubHub, which now has a restaurant base of nearly 75,000, said it expects revenue of $197 million to $205 million (roughly Rs. 1,276 crores to Rs. 1,328 crores) for the current quarter ending December, above analysts' estimate of $183.8 million.

CEO Matt Maloney told Reuters that the most intelligent way to grow the online food delivery business was by acquiring smaller properties.

"We are always looking for opportunities to do this, when it financially makes sense."

GrubHub has been on an acquisition spree to boost its restaurant network and has lapped up Foodler Inc, OrderUp and Yelp Inc's food delivery platform Eat24.

Investors are focusing on GrubHub's ability to integrate its acquired businesses and how quickly it can make them "meaningfully profitable", Stifel analyst John Egbert said.

Eat24 will start contributing to GrubHub's revenue from the current quarter and will start adding significantly to earnings from the third quarter of next year, CFO Adam DeWitt told Reuters.

The online food delivery business has heated up since technology giants Uber and Amazon.com forayed into that market.

While Uber and Amazon are tuning up their takeout services, GrubHub is forging partnerships.

"We are early on a lot of partnerships: Facebook, TripAdvisor, Yelp, and Groupon," Maloney said on a conference call with analysts.

Facebook launched a service earlier this month that would allow users to order food from restaurants such as Papa John's and delivery services such as GrubHub and Amazon-partner Olo.

"We're still trying to figure out how to change hungry Facebook diners into GrubHub or hungry Facebook users into GrubHub diners," he said.

While the partnerships are still work-in-progress, GrubHub had 9.81 million active diners in the third quarter ended September 30, up nearly 28 percent from a year earlier.

Active diners is a metric that tracks the number of unique customer accounts from which an order has been placed in the past twelve months.

GrubHub said third-quarter net income attributable to common stockholders slipped to $13 million or 15 cents per share, from $13.2 million or 15 cents per share, a year earlier.

Excluding items, the company earned 28 cents per share, on revenue of $163.1 million, beating analysts' expectations.

© Thomson Reuters 2017