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GrubHub Inc (GRUB)
Q2 2019 Earnings Call
Jul 30, 2019, 10:00 a.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
Prepared Remarks:
Operator
Good morning. My name is Denise[Phonetic] and I'll be your conference operator today. At this time, I'd like to welcome everyone to the GrubHub Q2 2019 Earnings Conference Call. [Operator Instructions]. After the speakers remarks, there will be a question-and-answer session. [Operator Instructions]. Thank you. Adam Patnaude, Head of Investor Relations and Corporate Development. You may begin your conference.
Adam Patnaude -- Head of Investor Relations
Good morning, everyone. Welcome to GrubHub Second Quarter of 2019 Earnings Call. I'm Adam Patnaude, Head of Investor Relations. Joining me today to discuss GrubHub results are our Founder and
Unidentified Speaker -- Head of Investor Relations
CEO, Matt Maloney and our president and CFO Adam DeWitt. This conference call is available via a webcast on the Investor Relations section of our website at investorsgrubhub.com.
In addition, we'll be referencing a press release which has been attached as an exhibit to our current report on Form 8-K filed with the SEC today. I'd like to take this opportunity to remind you that during this call, we will make forward-looking statements, including guidance as for our future performance. These forward-looking statements are made in reliance on the safe harbor provision of the Securities and Exchange Act of 1934 as amended, and are subject to substantial risks and uncertainties that may cause actual results to differ materially from those in these forward-looking statements.
For additional information concerning factors that could affect our financial results or cause actual results to differ materially, please refer to cautionary statements included in our filings with the SEC, including the Risk Factors section of our annual report on Form 10-K for the fiscal year ended December 31, 2018, filed with the SEC on February 28, 2019, and our quarterly reports on Form 10-Q for the quarter ended June 30, 2019 that will be filed with the SEC. Our SEC filings are available electronically on our Investor website at investors.grubhub.com, or the EDGAR portion of SEC's website at www.sec.gov.
Also, I'd like to remind you that during the course of this call, we will discuss non-GAAP financial measures in talking about our performance. Reconciliations to the most directly comparable GAAP financial measures are provided in the tables in the press release. Finally, as a reminder, all of our key business metrics exclude transactions like LevelUp and Tapingo with Grubhub only provides technology or fulfillment services.
And now, I will turn the call over to Matt Maloney, Grubhub's Founder and CEO.
Mathew Maloney -- CEO
Thanks, Adam. Good morning, everyone, and thanks for joining the call. During the second quarter, we generated 489,000 tags, up 16 % year-over-year. As expected, DAG growth slowed a bit from the first quarter because the first quarter included the large scale Taco Bell co-marketing TV campaign paired with free delivery. Active diners grew 30 % year-over-year to 20.3 million, sequentially we added 1 million net active diners. Our strong order and diner growth translated to net revenue of $325 million for the quarter, up 36 % year-over-year. Adjusted EBITDA for the second quarter was $55 million.
This is $4 million higher than the $51 million in the first quarter, despite the sequential seasonal slowdown in orders because of the operating leverage, we said we would realize as newer markets scale. Adjusted, EBITDA per order was $1.23 up from $1.9 in the first quarter. In these new delivery markets, we had another quarter of strong momentum in DAG growth with the added restaurant inventory helping these market scale. As Adam will touch on in his remarks, we expect a continued improvement in driver efficiency. through the balance of the year. This trajectory underscores our confidence that we will return to economic parity between GrubHub delivery and self delivery orders. This time while operating on a much larger scale and in a much broader and more diverse geographic footprint. We now have over 125,000 restaurants on the GrubHub marketplace, an increase of more than 10,000 partnered restaurants since April.
We had another record quarter of independent restaurant additions across all of our market segments. In today's world, independent restaurants know they need to have an online presence and delivery capability in order to compete effectively and reach the maximum number of potential diners. Our value proposition of packaging an online presence, demand generation and outsource delivery into a transparent paper performance model clearly resonates and allows our independent restaurant partners to focus on what they do best making delicious food for their customers.
The original focus of GrubHub was connecting independent restaurants with hungry diners, essentially providing franchise or type services like marketing and technology for small businesses that don't have the scale, resources or expertise to do it themselves. Years later, these small independent restaurants still account for the vast majority of our order volume. We had continued strong restaurant additions this quarter and the 225 delivery markets we launched during 2018.
But we're also seeing record restaurant ads in our oldest markets. For example, during the second quarter, we added hundreds of net new independent restaurants in New York City alone. Independent restaurant sales is an area where we are leveraging our data and insights to identify local favorites, and cuisine type preferences to vastly improve our sales targeting.
Restaurant churn has always been and remains extremely low in all of our markets, with restaurants predominantly leaving the platform only because they're going out of business. For good reasons, we have spent a lot of time in the last few calls celebrating our accelerated progress and bringing you well recognized national and regional brands on the platform.
It's a great growth catalyst for us, but it's also important to note that independent restaurants will always be a cornerstone of our business and we are extremely committed to making sure they succeed. We have consistently improved the value of a GrubHub partnership for tens of thousands of independent restaurant partners.
Over the last several years, we have tripled the number of active diners ordering from restaurant partners. Designed more and more ways for restaurants to efficiently access new diners, including CRM, emails, carousels in our platform and better targeted search to name a few.
Creative analytical tools for restaurants to optimize traffic and conversion on the GrubHub marketplace that can be access for free on their GrubHub provided tablets. Given restaurants the ability to connect GrubHub directly to the most popular points of sale systems for free. Built, highly efficient, low cost of every capabilities and continually provided the lowest and most transparent pricing for diners driving the most demand. Our record new independent restaurant sign ups and de-minimis attrition are proof of the strong perceived value of being an independent restaurant on GrubHub. We also continue to make progress with enterprise brains. We now have more than 35,000 enterprise restaurant locations live on our marketplace and roughly a 100 different national and regional brands that are each driving at least a 100 orders per day.
During the second quarter, we expanded coverage of brands like KFC, Duncan, Popeyes, Red Lobster, Bob Evans, Jack In The Box, Jersey Mike's, Dog House, Dee Jays and the halal guys[Phonetic].
And among the enterprise brands we already have agreements with. There are 1000 of locations that we still need to roll out to the marketplace. We'll be adding new stores as we integrate their PO systems and fine tune operational details over the coming quarters.
During the quarter, we deepened our relationship with another enterprise brand, Philadelphia based Honey Grove, who is now leveraging our full enterprise product offering, demand generation through our marketplace, running their white label app, fulfilling all delivery orders, data sharing and managing their omni-channel loyalty program, which includes the ability to earn and burn points on the GrubHub marketplace.
We now have roughly 750 products and tech employees throughout the U.S. and around the globe, an increase from approximately 400 at the end of 2017. They have been very busy this year pushing out a number of new features, including enhanced driver tracking for GrubHub delivery restaurants. Further personalization of the restaurant sort algorithm, streamlined customer care interactions, improved logistics and batch in capabilities and added functionality in a restaurant facing products.
The teams have also helped deepen relationships with restaurant partners by completing numerous direct point of sale integrations. We are now sending well over 30,000 DAGs directly to enterprise and independent PO systems, which is the best transition vehicle for minimizing errors and simplifying operations for our partners.
We are currently piloting an exciting new perks feature, which consolidates all of the diners, personalize discounts, incentives and loyalty rewards into a single place to find a non-stop stream of free food and other promotional offers, almost all of which are only available on GrubHub. When diners go to perks, they will find a treasure trove of restaurant funded incentives frequently totaling hundred of dollars in free food with the actual amount dependent on their location and ordering habits. Across our marketplace, restaurants have already committed to what we believe will amount to hundreds of millions of dollars in available incentives to attract and retain diners through GrubHub.
Perks is an integral part of our efforts supporting restaurant loyalty programs and we believe that it will be a strategic differentiator over the long-term. As diners start to focus on the significant consumer pricing disparity that already exists across third-party delivery platforms. Through perks, diners can also participate and track their progress In restaurant loyalty programs. These programs, which are designed and maintained by brands, enable diners to earn points by ordering from the restaurants on GrubHub. On the restaurant's white label site or app and even with the purchase physically in store. Spending across all channels is tracked with perks. So diners can easily see how close they are to earning additional rewards.
We believe that our loyalty tools will be more effective for our restaurant partners and our diners will realize significantly more benefit with perks serving as a centralized rewards hub for our diners. Perks is just another way GrubHub is bringing value to our restaurant partners. Be sure to check out the new functionality in our app and look for the national marketing support perks this fall.
A quick update on a Tapingo acquisition in the eight months we have owned the business, the teams have made fantastic progress integrating Tapingo's college campus digital ordering experience directly into the GrubHub app. Our deep college presence helps us connect with diners very early in their lives. This fall college students are more than 200 campuses across the U.S. will be linking their university meal plan accounts to the GrubHub app.
We are also enhancing the dining experience by leveraging our delivery capabilities to provide campus operated stores with the ability to deliver to students on and off campus. Existing Tapingo diners will be migrated over to GrubHub throughout the year as we transition from Tapingo brand. Finally, as I'm sure all of you have seen, there have been some negative articles in the New York media related to GrubHub's business practices.
To be clear, GrubHub is a two-sided marketplace that relies on restaurants and diners to succeed. We wouldn't be in business for over 20 years if it weren't for our restaurant partners. And any characterization that we are intentionally misleading or manipulating restaurants at their expense is patently false. Now while I'm going to give you color on the issues in the spirit of transparency, I want to point out that none of these issues are having a measurable impact on our business.
As I said earlier, restaurant attrition has not changed. They're having more success signing up restaurants than we ever have. With respect to phone orders, GrubHub is a demanding[Phonetic] platform and has always charged for phone orders, even before we invented the idea of digital takeout. We generate a unique phone number for each restaurant that provides its own delivery and this number is listed only on the GrubHub platform. We do this to make it as easy as possible for GrubHub diners to place orders, which ultimately means more orders for our restaurant partners.
For example, a new GrubHub diner may find a restaurant on our platform, but prefer to call a restaurant rather than place their first order online. Or a diner with a severe food allergy may need to call a restaurant to ask if a certain ingredient is included in the dish and while they're speaking to the restaurant, they go ahead and place an order. In both of these instances, GrubHub is driving the order to a local restaurant, so it should result in a billable order.
While we strive to be accurate, we designed our system to be conservative and believe that we are fairly charging restaurants for the value we bring. However, we still allow restaurants to review telephone orders via their manager portal, so we are completely transparent. We believe this is fair. If GrubHub is sourcing and driving the order, we should collect a commission. This has been our policy for years and has explicitly laid out in our restaurant contracts. We've also been accused of creating copycat restaurant websites to send more orders to GrubHub at the expense of our restaurant partners. This is totally false.
We historically created websites on behalf of restaurants to help them bolster their online presence and generate more branded orders without paying GrubHub's full commission rates. Years ago, when it was harder and more expensive for restaurants to maintain their own websites, this was a huge benefit of partnering GrubHub and like phone orders, it was explicit in our restaurant agreements. Restaurants would pay us significantly less on orders generated through these websites always a dollar or less. And in many instances, there was no commission at all.
To be clear while registered by us, we never acquired ownership of the domain and the restaurants could always request that we transfer their domain to their control at anytime. We ceased the practice of registering new domain names because it had become easier and less expensive for restaurants to maintain their own websites with the greater availability of third-party website building tools. To reiterate, at no time did our behavior in this regard constitutes cyber squatting and overall while this program was a drag on profitability, it was absolutely the right thing to do to support our restaurant partners.
As an aside, orders generated from phone calls and these white labor websites account for a small fraction of our business, together representing a low single digit percentage of our orders. We are engaging with government, media and other organizations to demonstrate the value we create for small and large restaurant brands alike. And more importantly, to bring to light how GrubHub provides the most transparent and consistently lowest diner facing fees in the industry.
While it is well known that online delivery has grown dramatically over the past several years, it is less known that diners on other third-party platforms are often paying 30% to 40% of the total order value in fees and markups on every transaction. When looking at the total cost of ordering, diners need to look at delivery fees, service fees and menu markups. These fees and markups are well documented through third-party research. And I encourage anyone to do price comparisons with our platform looking at the bottom line, total all and cost for like, for like orders.
I can't tell you how many conversations I've had with the diners who think they're getting free delivery from a competitor, but don't realize that they're paying 30% or more to that platform because of hidden service fees and menu markups. This is often the case even when they are paying for a subscription program for free delivery. It's clear that consumers will put up with price gouging in the short-term because of the novelty of being able to receive their favorite food without leaving their couches. But throughout time, consumers have proven to be savvy and they will look at their credit card statements and realize that in total they're paying way too much for that burrito when there are lower cost options for the same food from the same restaurants.
This is why GrubHub is so focused on keeping diner fees as low as possible. It's the best answer for all diners, restaurants and even drivers, and the only answer for a long-term sustainable growth in this industry. Thank you for giving me a minute to set the record straight. We've accomplished a lot so far in 2019, but there's still lots more to do in the second half of the year. And we look forward to updating you on our progress this fall. And with that, I'll turn the call over to Adam.
Adam Patnaude -- Head of Investor Relations
Thanks, Matt. I'll start by walking through the details of our second quarter results and give some updated thoughts on guidance before opening the call up for Q&A. GrubHub process, 489,000 DAGs in the second quarter, up 16 % from the second quarter of 2018. On a sequential basis, DAGs were 6% lower than the first quarter. Historically, we've seen a sequential decline of low to mid-single digits from the first to the second quarter due to seasonality.
Decline was a bit exaggerated this year by the Taco Bell National Television and free delivery campaign in the first quarter than that referenced, as well as the timing of the Easter holiday, which we mentioned last quarter. Active diners grew 30 % year-over-year to $20.3 million in the second quarter, as we added 1 million net new active diners during the quarter compared to 500,000 net additions during the same period last year. Our strong active diner growth as a result of our ever improving restaurant network, efficient advertising and broad delivery coverage.
Calculated orders for active diner was lower than last year as it has been in past quarters. But as a reminder, this isn't really a fair way to measure the activity of our individual diners for two reasons. First, we continue to make shift away from New York and corporate diners where diners have a materially higher frequency than any other market in the US. And second, and perhaps slightly more nuanced. We've stepped up net diner additions in recent quarters. Having a higher percentage of new diners distorts the frequency calculation because they have not been on the platform for the entire quarter. And they also continue to increase frequency in future years.
Gross food sales for the second quarter. We're $1.5 billion, increasing 20% from the prior year, with our average order size up 3.5% to slightly under $33. This 3.5% increase represents a little bit of an acceleration in growth in recent quarters.
Roughly a year ago, we made the decision to eliminate minimums from our GrubHub delivered orders because it drove more orders and higher overall diner LTV even though it was a slight headwind to average order size. This was the first quarter with zero means in both the current quarter and the year ago comparable quarter. This is much of the acceleration from the 1.2% increase we saw in the first quarter. The first quarter average order size also had a slight headwind from the Taco Bell free delivery campaign, which temporarily lowered the order size for Taco Bell orders. Second quarter net revenues were $325.1 million, up 36% year-over-year. Our reported capture rate of 22.3% includes roughly 90 basis points from LevelUp and Tapingo's technology oriented revenues. This is similar to the first quarter impact. Normalizing for LevelUp and Tapingo revenue, capture rate was up about 170 basis points year-every-year and 70 basis points sequentially, reflecting a mid shift toward more GrubHub delivery orders and also continued small upward impact from restaurants choosing to pay more on our marketplace for more impressions. Orders we deliver on behalf of our restaurant partners accounted for nearly 35% of our DAGs during the quarter.
Operations and support expenses grew 59% year-over-year from $102.4 million to $162.4 million in the quarter, driven by increased GrubHub delivered orders and the underlying growth of our ordered volume. Revenue loss operations and support costs per order, which helps gives perspective to the growth and operations and support costs, while normalizing for the mid shift to increased GrubHub delivery orders was $3.66 per order, an improvement from $3.46 in the first quarter.
This increase highlights the progress we've made toward reducing the investment in delivery markets we made in the fourth quarter of last year. As Matt noted, these markets are scaling quickly, resulting in improving driver efficiency and a lower per order delivery cost. Recall our operations and support line contains most of the variable cost associated with orders that are not already netted out of revenue, including all driver pay, any driver subsidies, background checks, insurance, gear, credit card processing costs and driver restaurant and diner customer care costs.
We are now operating these new GrubHub delivery markets for a couple of quarters. And as expected, diners in these markets are behaving a lot like diners do in other markets. Specifically the order frequency of diners increases with the introduction of GrubHub delivery, which improves restaurant inventory in a market. And the average order values in these newer delivery markets, regardless of population size or density of the market are in line with other more established GrubHub markets.
We are encouraged by the sign of behavior and it further reinforces our view that we have a formula that leads to economically sustainable growth in all types of markets. Driver pay does still exceed delivery revenue in some of these newer markets. However, given our progress, we remain confident that we will have completely grown into the excess capacity and be able to balance these markets by the end of this year, as we've said previously.
Of note, we've been talking a lot the last few quarters about our progress in new markets, but we've also been making great progress on delivery efficiency overall. As we've scaled, we found many opportunities to deliver food more quickly in a lower overall cost.
Over time this will allow us to reinvesting growth throughout the business, whether it's in lower delivery pricing, marketing or other opportunities. Sales and marketing expenses were $74.1 million in the second quarter, a 60% increase compared to the same quarter last year and down 6% as expected from the seasonally strong first quarter. We'd expect sales and marketing expense to fall typical seasonality for the remainder of the year with third quarter expense roughly in line with the second quarter, and sequential step up from the third and the fourth quarter. We are still finding plenty of opportunities to acquire diners in a reasonable cost, as evidenced by our 1 million net active diner additions during the quarter. Our advertising channel mix hasn't changed dramatically over the last several quarters, but that doesn't mean we aren't testing and investing capital to find the best opportunities to acquire high quality diners.
These opportunities can take many forms beyond traditional advertising, like promotions, pricing, product offers and delivery leverage to name a few. We use the same value based framework to evaluate all of our growth investments, whether traditional advertising or other. Technology expenses excluding amortization of web development were $29.4 million for the quarter, increasing 57% from the second quarter of 2018. A majority of the year-over-year growth is related to the engineers we acquired with LevelUp and Tapingo late last year, which we won't fully lap until the first quarter of 2020.
Depreciation and amortization was %27.2 million for the quarter, up 37% year-over-year. G&A costs were $25.8 million, up 42% from last year, mostly related to the acquisitions of LevelUp and Tapingo, and an increase in miscellaneous costs consistent with the growth in our business. GAAP net income was $1.3 million in the second quarter compared to the prior year of $30.1 million. Net income per fully diluted common share was $0.1 and approximately $92.8 million weighted average fully diluted shares. Non-GAAP net income was $24.9 million or $0.027 per fully diluted common share compared to the prior year $46.3 million or $0.050 per fully diluted common share.
Adjusted EBITDA for the second quarter was $54.7 million compared to $67.4 million in the same quarter of the prior year. Adjusted EBITDA per order, which we view as a good indicator of our profitability was a $23 in the second quarter compared to a $1.09 in the first quarter and $0.98 in the fourth quarter of 2018. The $0.25 increase in EBITDA per order from the fourth quarter of 2018 to the second quarter is primarily a result of our improvement in delivery efficiency as I discussed earlier.
In June, we issued $500 million of Senior Unsecured Notes. We use the proceeds to repay our existing $325 million bank loan and pay down the roughly $20 million that was outstanding on a revolver. The remainder of the proceed is about $150 million went to our balance sheet. Following this refinancing, we have $500 million of new notes outstanding. $375 million of cash on the balance sheet and a $235 million undrawn but committed revolver.
We felt some debt as a more permanent part of our capital structure was appropriate given our size and also for just greater strategic flexibility if opportunities arise. And I'll provide some thoughts on guidance. We currently expect third quarter revenue to be in the range of $320 to $340 million, and we are tightening our full-year revenue guidance range to $1.34 billion to $1.39 billion. The guidance reflects our typical order seasonality, where we see a sequential decline of DAGs in the third quarter relative to the second and a strong uptick in the fourth quarter. We expect third quarter adjusted EBITDA to be in the range of $53 to $60 million. And we're tightening our full-year EBITDA guidance range to $235 to $250 million. Our guidance continues to apply adjusted EBITDA per order of more than a $1.50 in the fourth quarter. As our recently launched delivery markets continue to get more efficient and we lap the $20 million step up in marketing in the fourth quarter of last year.
With that, Matt and I will take your questions. Operator, please open up the lines.
Questions and Answers:
Operator
[Operator Instructions] Your first question comes from Jason Helfstein with Oppenheimer. Your line is now open.
Jason Helfstein -- Oppenheimer -- Head of Internet Research
Thanks. So like one question in a housekeeping. So you kind of ended on making a point of talking about that you're seeing favorable CAC levels and you could see that sales and marketing as a percent of revenue GFS has improved sequentially. However, it does appear that the industry has decided that the higher diner LTV justifies higher total marketing, promotional take rates for chain restaurants and higher CAC. And so I guess the question, high levels, you know, if you don't make changes to your CAC LTV model, does it cap your growth or market share at some point? And then just model housekeeping question. It does look like the guidance implies or can you confirm that the guidance implies a $1.50 of EBITDA per order in the fourth quarter? And is all the leverage in that number in ops and support line? Thanks.
Mathew Maloney -- CEO
Yes Jason, how are you doing? In terms of the first question, you know what I would say is, look, I mean, from a framework perspective, you know, we're always going to think about how much do the diners that we acquire cost versus how much value do they deliver to us overtime, right? And so we're constantly, you know, to your point, while not changing that basic framework, we're always changing how we view value and what we're seeing in terms of cost. So I don't think that there's any cap and enters our growth in artificial cap because we're looking at the lifetime value of the diner and what we're going to get from it overtime. I mean, what we're not doing is, you know, looking at , you know, a CAC or a CPA, you know, let's say, look, it cost us one $100 to acquire a new diner. But there's no way we we think that the diner is ever going to be worth a total of $50. You know, we're not going to go out and make that trade-off. We're still taking a view of a overall -- based on the behavior that we see, based on the profitability, the orders that we have, and based on our infrastructure and everything else, what the value is overtime. And we're finding a lot of opportunities to deploy capital to do that. And frankly, we're doing a a better job of it now than we were a year ago or 18 months ago, as you can see in the diner growth. Actually, sales and marketing get during the quarter sequentially, but we still have strong net new diner ads, so we feel good about that. And the framework is made so that it evolves with what's going on in the marketplace. In sort of the second question, yeah, absolutely.
The implied guide in the fourth quarter still has a $1.50 plus in terms of EBITDA and the story hasn't changed there at all, right? It's a combination of leverage and option support. But then also, as I mentioned in my comments, you know, we're going to lap the big step up in marketing that we had in the fourth quarter last year. And we don't see another similar $20 million step up in the fourth quarter this year, so you're going to see that. You'll also see just general leverage in the business, you know, the fourth quarter is a big tick up in terms of orders and and frequency, and it will leverage the fixed costs in our business too. So all three of those components will get you above $1.50 in the implied guidance for the fourth quarter.
Jason Helfstein -- Oppenheimer -- Head of Internet Research
Thanks.
Operator
Your next question comes from Mark May with Citi. Your line is open.
Mark May -- citi
Hey, guys, thanks for taking my question, appreciate it. You reference the planned marketing campaign later this year for perks, I believe. Does that represent a meaningful overall step up in your marketing budget in the second half versus a year ago? And then total order growth in the quarter, I think it was up 16% year-on-year sales and marketing per order of nearly 40%. Just curious, are you seeing any change in the competitive intensity in a particular region going forward? Clearly, it looks like in Q2, you know, there was a slowdown in orders and an increase in acquisition costs as you look forward kind of quarter to date or in recent months, are you seeing any changes there? Thank you.
Mathew Maloney -- CEO
Yeah, in terms of the marketing campaign and perks, you know, just from a functional standpoint, it's not -- it's not an incremental on top of our current plan. It's just part of our current plan, right? We have this great new product where restaurants are funding free food for diners and, you know, work. We're packaging it in a unique way. And we will be pushing it out to diners in a way that we think will not just drive conversion for new diners, but also drive frequency for returned diners and potentially impact order size and things like that.
I mean, all these things that we do are incremental. So I don't I don't foresee, like, you know, a big step up for many any individual thing. But, you know, the campaign aspect of it is just part of our, you know, our current marketing program. It might just be adding it's a messaging of stuff that we already do. It may be profiling specific, you know, digital. Ads around it, etc., etc., but nothing, nothing out of the ordinary .Towards the order growth, you know, we're not -- you know, the way to think about the sales and marketing expense, we've always talked about as being 95% plus related to new diner acquisition. And we have the number that we disclose is net active diners, not not gross new diners. And so, last quarter we had a supplemental disclosure where we showed you guys what that gross CPA looked like overtime.
What I'd say is that trend hasn't changed. We're still seeing plenty of opportunities to acquire new diners at a reasonable cost. And that has not increased the costs there, whether it's competitive or running out of runway or not launching, whatever it is, we haven't seen a headwind on our ability to acquire new diners at similar cost as we have over the past several quarters.
Mark May -- citi
Thanks.
Operator
Your next question comes from Robert Mullens[Phonetic] with Gordon Haskell. Your line is open.
Robert Mollins -- Gordon Haskett
Hi guys, thanks for taking the question. Given the stronger than expected diner growth in the quarter and revenue coming in at the high end of the 2019 guidance range, what are you seeing that made you take down the top end of that revenue guidance for 2019? Then just a quick second question. Has there been any improvement in driver retention resulting from the driver pay changes? And any comment on hiring new drivers would be helpful as well? Thank you.
Adam Patnaude -- Head of Investor Relations
Yeah, in terms of the diner, in terms of the first question, were you talking about the revenue guide or the EBITDA guidance?
Robert Mollins -- Gordon Haskett
The revenue guidance.
Adam Patnaude -- Head of Investor Relations
Yeah, I mean, look, in terms of the revenue guide. There's a lot of variables that go in there, right? When we set the guidance for the full-year and there's a lot of things that go into that, not just orders, but also pricing, promotions, etc.. And, we've kind of set guidance where we think we're going to be for the remainder of the year, given the different things that we're thinking about doing and feel good in terms of the trajectory of order growth.
And, we technically didn't take it down. I think we just didn't bring it up based on the revenue beat, but still very much within the guide. And, like I talked about earlier from an EBITDA per order perspective, we're still forecasting over the $1.50 exit rate for the fourth quarter. On the driver side, look, I mean, we're doing lots of things. If there's not a -- we're constantly tweaking models in terms of how much we pay, how we're recruiting drivers, and scheduling versus not scheduling, and what I say overall is you can see in our revenue less option support numbers that we're making a lot of progress
overall in terms of revenue less what we're having to pay drivers. But I wouldn't necessarily -- it has nothing to do necessarily with the total amount that we're paying drivers. It has to do with our ability to better schedule and better match supply and demand. And so to the extent that we're tweaking pay models, we are having that, you know, we're having success there.
Robert Mollins -- Gordon Haskett
Great. Thanks, I appreciate it.
Mathew Maloney -- CEO
Hey, Robert, I just want to add one more thing, because there has been a lot of attention on drivers in the media lately and what's going on. You know, we recognize there's a lot of options in the gig economy. We want to make sure that we're as competitive as possible, so that the pay change specifically wasn't to pay our drivers less or to increase profitability. We want to. We want drivers to feel like they're paid as fairly as possible. And so this is really more accurately paid drivers for their time and distance as we've been very vocal, 100% of our tips go to the drivers and we want to make sure we're extremely positive and partner with the drivers and giving them an option to make a great money very flexibly.
Robert Mollins -- Gordon Haskett
Understood. Thank you.
Operator
Your next question comes from Tom Champion with Cowen. Your line is open.
Thomas Champion -- Cowen
Hi, good morning, guys. Curious if you could update the marketplace versus delivery split within GFS. And second question, just one quarter into the Taco Bell partnership. Can you talk about how that's going and maybe any opportunity to expand the Pizza Hut? Thank you.
Adam Patnaude -- Head of Investor Relations
Yeah, I'll grab the first, so marketplace for delivery versus delivery, I think so just to clarify, we talk in terms of percentage of orders that we deliver versus percentage of orders that the restaurant delivers. And, I think in my prepared remarks I said about 35% of orders GrubHub is delivering at this point. I don't think, GFS might be slightly different than that, but that's a delivery number. I'll let Matt take the Taco Bell partnership question.
Mathew Maloney -- CEO
Yeah, thanks. Taco partnership is going great. Fantastic team over there. We really knocked it out of the park earlier this year. We're trying to figure out how do we continue the momentum. KFC is going to decide when to launch their own national advertising campaign. But like we said before, nothing from our end preventing the campaign from starting.
We have more than 3,000 KFC's in the platform. We know what's coming and we're looking forward to supporting that along with our white label app, which we're building for them, working very closely. Just really can't wait for that to kick off. And then with Pizza Hut, I think you mentioned on its earnings that Pizza Hut's really excited based on the early results of our partnership there.
And we're figuring out how to expand that pilot and we'll have more information on that when it's nailed down. But back in May, you mentioned that there is over 200 Pizza Hut locations On Grub they're very happy with the performance they've seen on incremental orders.
Operator
Your next question comes from Brad Erickson with neither one company, your line is open.
Brad Erickson -- Needham & Company
Thanks. So just a couple. First, you've talked about this $1.50 in orders in Q4. That seems to be tracking in line. Do you expect sustainability of that past quarter level going for or will you invest incrementally for faster growth? Just maybe help us expand or thinking around the philosophy for growth in 2020 beyond this focus on Q4 of this year? Then a follow up.
Adam DeWitt -- cfo
Yeah, I think the the $1.50 has been kind of, you know, where we forecast the business to get to. I think, you know, to your question about where it goes next year. There's no, you know, there's no set target, right? But, you know, it's more about what are the opportunities that we have to invest for growth. And so, you know, just the way that the business works, it's a hyper local business that generates a lot of scale because we can service it from a centralized location. So there's a natural tailwind on that $1.50 overtime, right? But if we can find good opportunities to reinvest, we're always thinking about that. Even now on our way to, you know, even as we are progressing from the $0.98 to the $1.09 to the $1.23 this quarter, we are at the same time investing for growth, right? And so if there's opportunities to invest for growth, you know, like I mentioned earlier, it doesn't have to be explicitly through marketing spends, but it can also be through promotions or unique offers or things like that.
And so, you know, I think the way to think about the $1.50 is a good level. But if there's opportunity to invest in the business long-term, you may stay at a $1.50. But as we said in the past, you know, what we're trying to do is maximize our cash flow, that $1.50 could be a lot higher, right? It could easily be over to $2. It could easily be close to $2.50. But we are seeing a lot of opportunities for growth. So that's why you're seeing the fourth quarter even at a $1.50.
Brad Erickson -- Needham & Company
Got it. And then just a quick follow up. Do you get any benefit or acceleration to the growth rate as you see this mix shift at some point from -- you called up the mix of marketplace versus -- or Grub deliveries versus restaurant deliveries. It looks like now your revenues probably cresting a little bit higher for Grub delivered orders. Do you get any improvement to the growth rate or help in that mix shift?
Adam DeWitt -- cfo
I think the way to think about it from a diner behavior perspective is that, you know, from a diner perspective, the restaurant, you know, the behavior is the same. right? Whether it's a GrubHub delivered restaurant or a restaurant that delivers for itself. And so I don't think you see any natural acceleration from a -- or deceleration frankly from a mix shift in one toward the other. We do have -- the revenue does go higher, the capture rate goes higher, because in the case where we're doing the delivery, we're charging for the delivery. So there's a second component to the revenue in an order that we deliver for, in addition to what the restaurant pays for demand gen.
Thomas Champion -- Cowen
Got it, that's great. Thanks.
Operator
Your next question comes from Maria Ripps with Canaccord. Your line is open.
Maria Ripps -- Canaccord -- Analyst
Good morning and thanks for taking my question. First, there's been a lot of press report about various hypothetical mergers. Do you have any high level thoughts on how you're thinking about the M&A landscape? And secondly, and maybe just a follow up on the earlier question, it appears that your smaller delivery markets are gaining efficiency from the unit economic standpoint. If you look at the next year, what are some points of operating leverage in the model that could help you grow profitability may be in excess of revenue?
Mathew Maloney -- CEO
Hey Maria, I'll take the first one. Adam can take the question on efficiency and leverage next year. I think that, I'm -- there are a lot of rumors, which is kind of interesting, I don't know where the industry is going to land, I think that I have, I've seen it evolve over 15, 20 years. There are a lot of players right now making a lot of poor business decisions. And I think that there's a lot of money and likely a lot of investors that are concerned about their own liquidity and how their investments are going to play out. So I think the conditions are favorable for consolidation. But how that actually plays out, it's hard to tell. There's been a few companies that have been rumored to be on the market for definitely months if not years, and nobody seems to be interested in acquiring them. And, I would only assume that it would be because of poor unit economics, poor competitive differentiation or poor management. And I think that when we look at our forward opportunity, we try to figure out our strategic differentiation and we've been very consistent that our businesses is founded on partnership, working with the restaurants, understanding what the restaurants really need and trying to help them achieve their business goals in digital pickup and you see a lot of investment on our enterprise side, with loyalty programs, with POS integration, with specific tools, building white label apps for restaurants helping them own their customer because that is a valuable asset for their businesses for the long-term. It's accumulating in the perks products that we're talking about right now where we expect to see hundreds of millions of dollars in restaurant funded incentives. And if you think about the broader scale and especially my prepared comments around price gouging. And in our industry right now, it really is kind of the Wild West what you saw in travel years, years ago, where objective price is kind of unknown. That's why I called out our menus and our platform as the one that has no incremental fees, so you can actually do your own work and understand how how aggressively competitors are charging.
I think there was a sell side report yesterday, in fact, highlighting that we significantly beat everyone else and the actual amount that the consumer pays. And I think that overtime as you saw in travel, consumers will rise up, there will be more intelligence. And if that's the way we're gonna differentiate and if that's the way we're going to win over the long-term, I think you see how the perks program really dovetails with our partnership strategy and our low and transparent fees strategy and it all works together to be a significant economic win for the consumer, which overtime will win. So that's the way we're thinking about it. I'm not thinking about M&A specifically either acquisitions or exits. We have a real opportunity to win in a big industry and we're aggressively chasing that down and really doing everything we can to win.
Adam Patnaude -- Head of Investor Relations
And Maria, In your second question about leverage. I mean, you know, at the end there's a lot of opportunities, right? There's fixed costs in the business. You know, there'll be continued delivery efficiency overtime. You know, we'll likely get some operating leverage on sales and marketing next year. But I think, look, it's important to remember that we aren't -- as I said in the last question. We're not trying to maximize profits, right? We're -- or maximize cash flow. And we're thinking thoughtfully about growth and how do we make investments for growth. So those are the areas where you could see operating leverage. You know, we do think, you know, we have a very profitable model in terms of long-term sustainability, the breadth of restaurants, the combination of how we charge. diners and and what the restaurants pay us and the formula work. So it's, you know, we feel great about the $1.50 number in the fourth quarter. And there's a lot of -- there's a natural tailwind in the business going forward and it could be in any of those line items, you know, we are some of them.
Maria Ripps -- Canaccord -- Analyst
Great. That's very helpful. Thank you both.
Operator
Your next question comes from Jeremy Scott with Mizuho. Your line is open.
Jeremy Scott -- Mizuho -- ANALYST
Hey. Thank you. So lots of work being done on both the restaurant and the customer experience. It seems like the leap and delivery mix has prompted restaurant operators to accelerate their investments in their own in-house technology and their own branded ecosystem in certain cases. Yeah, that seems to have left room for a new crop of these third-party online ordering platforms to wedge their technology in between. So I'm wondering how your strategy may shift in an environment where your restaurant customers seem to be putting more effort into pursuit of direct channel. You talked about a white label, solutions, loyalty, and now the perks spot. But how do you stay inside the tent and do you need to expand your suite through any vertical M&A?
Mathew Maloney -- CEO
Hey Jeremy, I would say it's completely in line with our strategy, and this is what we do. We support the restaurants and, you know, look at the young partnership. On one hand, you have KFC, which has had limited investment technology overtime. And we're supporting full stack over there. We're even building the White Label app. On the other side, you have Pizza Hut, which has a fully functional built out website, app delivery, infrastructure capability, I mean, the whole thing. And so we are also piloting and figuring out where the various feature options that we offer will fit into their existing infrastructure and how we can make them more efficient or perhaps extend their delivery boundaries by augmenting our delivery capabilities in addition to theirs. So there's different ways we can work and it's a very flexible solution. I think your question, which is a good one. If you're thinking about other offerings in the space, that is a one size fits all for a restaurant, I would say that's not very partnership friendly. And in those cases, they will need to figure out a way to work with restaurants that rightly don't want to pay the full commission rate on 100% of their digital orders. This is the rock and a hard place I've been talking about for a few quarters now where restaurant management teams have an issue. They don't have the experience or the resources to build out a full technical infrastructure. And yet they also don't want to pay 30% for a significant portion of their of their revenue. So we've been very upfront, especially with our enterprise partners, first saying we want to help you build your asset. We want you to own your diner. We want to help you through. loyalty programs through white label support, through POS integration, through co marketing opportunities, help you build your brand at Asta[Phonetic]and then when you are looking for growth, when you are looking to increase your same-store sales on an annual basis, you can come to our platform first because we're the most integrated. And the diners that you acquire through our growth networks are then able to be tapped into again and again through your own brand channels. So I don't think we need any M&A directly to your question. I think we have it all. I think we're already doing this. We're doing this very effectively.
Jeremy Scott -- ANALYST
Got it. And just maybe just to follow on that. So there is a bit more focus in your prepared commentary on independent restaurants. I was wondering if that was a response to some of the press reports that you mentioned or if you're signaling that you're leaning a bit more into that side of the business given the suite that you currently offer caterers a bit more to their needs. And then simultaneously with that also, I mean, you're you're shifting away from securing larger national chain businesses where the economics seem to be a bit more volatile?
Mathew Maloney -- CEO
No, I don't think so. I think that the prepared remarks focus on independent restaurants. Frankly, we haven't talked about it at restaurants in a while. We keep talking about our success on the enterprise side and we're investing very heavily to support our new enterprise partners. And I think you will hear a steady drumbeat of significant partnerships in the near future from us. But in all of that, I want to be sure to make sure everyone's aware that the majority of our orders are coming from independent restaurants. The significant amount of the growth as we talk about our small markets that are new delivery markets becoming more efficient that's because of independent restaurant growth, we're adding thousands of independent restaurants in these small markets to give diners other options when we have our kind of our keystone young partners in these markets. We then flush out the rest of the market with independents.
And so the tools that we're building now for enterprise specifically around POS, around CRM, around loyalty, they will also trickle down into our independent restaurant offerings. Perks is one of the first times that's happening. Perks are not only restaurant enterprise restaurant loyalty programs and enterprise restaurants CRM incentives, but they're also the local independent restaurants, loyalty offerings that we are starting to work with them on.
Jeremy Scott -- Mizuho -- ANALYST
Got it. That makes sense. Thanks guys.
Operator
Your next question comes from Heath Terry with Goldman Sachs. Your line is open.
Heath Terry -- Goldman Sachs -- Analyst
Great. Thanks. I guess one maybe technical question, but just curious how you're thinking about the potential impact of AB5, should it be implemented in California and what you think that process would look like? And then, Matt, fully get the difference that you've talked about in terms of price. Anything that you guys think you can do. just sort of get that message out there beyond just waiting for people to sort of figure it out from their credit card statements, I think as any consumer who has noticed that knows it's a it's a pretty big difference and seems like it could be a pretty powerful marketing message for you, you know, communicated the right way?
Mathew Maloney -- CEO
Yeah, I'm not sure if I was clear, but I tried to make that point in my prepared remarks Heath. But it's hard for in a very competitive industry for one competitor to kind of hang their hat on their differentiation being price. But I mean, the reality is it is it's crazy out there. I think you've noticed it. There are, like I said, that I've had so many conversations with diners and it's not just run of the mill typical at home individuals. I've had real conversations with producers at major media outlets who are adamant that they left, you know, a seamless product for a competitive product when they moved out west for a job that they paid zero in delivery fees. And, you know, we literally have them bring up their last receipt and show them the 35% percent service charge that they paid on wittingly. So I think it's it's ridiculous.
I've seen some third-party research, I'm putting our platform out there as as a baseline. I hope that there is more about this. I hope that banging is gone, you know, there has been a fair amount of tension on our practices on the restaurant side in New York that I've been very clear as bogus. But there are bad actors in the space. And so I hope that we can reorient this attention to some of those negative practices, because that's really hurting consumers. And like I've said a couple of times, I think it's going to be growth limiting for industry. And overtime I think that the executing above board will be the winning strategy and we're just going to continue doing that as long as forever.
In terms of the California legislation, we definitely have teams that are following the legislation, we're engaging with government agencies when it's appropriate, you know, I'll say that I don't think this is good for our industry and I don't think that's what drivers want either. But a couple of things to keep in mind. First, we only deliver like 35% of our orders. The remaining are delivered by the restaurants themselves. There's a bit of a structural advantage for what we are doing. And also, no matter what happens if it's rolled out, it'll apply to everyone equally. And if you think that, you know, $10 delivery fees are egregious now, you know, just wait until the you know, the 30% to 50% increase in cost for delivery flows through because, you know, the diner is going to be on the hook for that, also in competitive platform. So I think that you'll see accentuating pain on the consumer side. If if this goes through and I think that given our structural advantage, we're going to be you know, I don't think it should happen, but it's not going to be as bad for us as for others.
Operator
Your next question comes from Brian Nowak with Morgan Stanley. Your line is open.
Brian Nowak -- Morgan Stanley
Thanks for taking my questions. I have to just to come back to the full year revenue guidance change. I know there's a lot of puts and takes in and an outlook, could you just sort of talk to us about the the one or two largest mathematical drivers of the lower revenue expectation for the year now? And then just to come back to the delivery efficiency point. It looks like ops and support per order was was up sequentially and was actually a little higher than we thought. Is there something going on in that and that line where it sort of obfuscating delivery, efficiency or huckster? We think about ops and support per order as we go throughout the course of the year and into next year.
Unidentified Speaker
yeah Brian. Thanks for the question. You know, in terms of the revenue outlook, you know, I mentioned, look, there's a lot of things on the pricing side. I also talk a lot about my prepared remarks, different ways to invest in growth. And, you know, that can come in it in the form of offering free delivery for new diners. It can come in the form of just lower, low overall pricing or some other mechanism that we choose to, you know, basically marketing that we choose to put through the revenue line as opposed to put through the marketing line. And so those are those are the types of things that you're seeing drive the revenue guide for the year. you know Overall, we feel really good about the the order forecast being very similar to what was baked into the forecast previously or baked into the guidance previously. In terms of the ops and support and per order, I think a better way to think about this.
And we talk about this and I talked about my prepared remarks and just overall, I think it's better to talk about in terms of revenue, less stops and support. I think it gets confusing options. Support's going to go up disproportionately to revenue because we're mix shifting toward delivery. So as as you're increasing your mix of delivery orders, that line item is going to grow quicker. But it's going to be offset by increases in revenue. But because revenues at a higher overall level, it's kind of obfuscating the relationship there. So you're going to see ops and support go up in most cases disproportionately to order growth. But when you look at revenue less ops and support, you're seeing some pretty good momentum.
Adam Patnaude -- Head of Investor Relations
on the -- I'll call a contribution profit, but kind of revenue less variable costs of the orders. Does that make sense?
Brian Nowak -- Morgan Stanley
Yeah, that make sense, I guess the only challenge, I guess, the revenue is going down and ops and support per order keeps going up, I guess how are you sort of thinkink about managing that equation into next year?
Adam Patnaude -- Head of Investor Relations
I'm not sure, so the revenue is going up though too, right? And the revenue is going up more than the ops and support costs per order. Right?
Brian Nowak -- Morgan Stanley
Got it. Okay.
Mathew Maloney -- CEO
Okay.
Operator
Your next question comes from Ron Josey with JMP Securities. Your line is open.
Ron Josey -- JMP Securities -- Analyst
Great. Thanks for taking the question. Maybe to please, Adam, you talked just, I wanted to talk about the DAGs growth in 2Q and understood 2Q didn't have delivery or the national campaign with Taco Bell, but I'm wondering if that 16% is maybe the underlying growth to the biz on maybe an organic level and just if you could remind us how you're thinking about the trends in the 3Q and 4Q understood, what you just told Brian.
And then also you mentioned the mix shift away from New York City and corporate diners. And just wondering if you can give us some insights on the growth in tier 2 and 3 cities around the size of these markets and relative to how big they are to GFS overall? I think that'll be helpful. Thank you.
Adam Patnaude -- Head of Investor Relations
Yeah. So in terms of the growth rate, you highlighted the 16%. Look, it's a good baseline for the organic growth when you think about it in the context of the first quarter growth of 18%, 19%. But then, as we mentioned in our prepared remarks, you removed the big tailwind we had in the first quarter from Taco Bell. And then you also have a little bit of, you know, I mentioned in my prepared remarks a little bit of the Easter overhang, and you see the sequential decline of 6% and it kind of all lines up with how we've performed historically, from a first quarter to second quarter, so we feel really good. In terms of patterning for the rest of the year, I would assume, we're going to see a little bit of a step down in the third quarter like we typically have, and then a good step up in the fourth quarter. And given the comments I made about our revenue mix, our revenue pricing, you can kind of back into what those, you know, what a reasonable growth rate is. I think the thing I want to point out is at 16%, that includes, you know, the E24 business, that includes the Yelp, that includes corporate and includes some of our older markets. And so when you're thinking about all of that and then look at what we were doing a year ago, the 16% is actually quite a bit higher than where we were in the in the second quarter of last year. If you go back and add in what E24 was growing at, what Yelp was growing at, what corporate was growing at the time. So, you know, longer answer. Short answer is, it's a good, you know, a good jumping off point from an organic perspective. And then I think you asked about the mix and the markets, you know, I think it's been a story that's -- it's a story that's similar to what it's been over the past several quarters, which is, you know, those tier 2, tier 3, you know, non original seven markets that we've been in are driving disproportionately the growth for the company. You know, the original are still growing, but they're certainly growing at a, you know, at a lower rate than those tier 2, tier 3. So we've become more and more geographically diverse. You know, I think last quarter we mentioned, you know, 60 markets that were over a thousand DAGs and 20 markets that are over 3,000 DAGs. I know I'm guessing because the seasonality that hasn't changed much. But we do see, you know, you see those markets as a whole driving a larger percentage of our DAGs than they have, you know, even last quarter.
Ron Josey -- JMP Securities -- Analyst
That's great. Thank you very much.
Operator
Your next question comes from Nat Schindler with Bank of America. Your line is open.
Nat Schindler -- Bank of America
Yeah. Hi, guys. Just a question on the active diner growth that you've had and the accelerations you've had since previous years. Are these diners similar in behavior to previous cohorts and diners that you have taken? And if so, do we expect gross food sales growth to go up toward the level of your active diner growth at this cohort?
Adam Patnaude -- Head of Investor Relations
Yeah, and now you're starting to cut out. But I mean, I think I understand the gist of your question. You know, in the prepared remarks, I talked a little bit about frequency and what is weighing on frequency. And I think that's a structural headwind as opposed to an ephemeral headwind, because the diners in New York and the diners and corporate are always going to order more than the newest diners outside of New York and in corporate. You know, as we look out into the further markets, we are seeing good, good frequencies and ramps and frequencies overtime. I think the other thing that, you know, the other impact that will go away overtime that's weighing on frequency a little bit is that we've gone through this period of really strong new diner. Acquisition. And so just mathematically, when you have newer diners disproportionately in your active diner base, it's going to weigh on frequency a little bit. So that impact should go, you know, would go away over time if, you know, a new diner growth doesn't stay at a super high level. But the other kind of structural difference will be there forever.
Nat Schindler -- Bank of America
Okay. And one further clarification on this. Have you seen any indication, though, you said in the past that you're not fighting for share of stomach in marketing, but have you seen any data that suggests that your diners are using multiple different services or different apps over the course of the month, or are they really sticking to a single plan?
Adam Patnaude -- Head of Investor Relations
yeah, we haven't seen it. I mean, what I can tell you is, you know, once the cohorts become stable, we're still seeing really consistent behavior, like what we showed you in the supplemental disclosure deck last quarter. So I can't remember what year it was. It was a '15, '16 or '17 cohort. But we're not seeing that change. And we didn't see a change last quarter. And it didn't. It hasn't changed in an appreciable way this quarter either. So if it's happening, it's happening in addition as opposed to substitute.
Nat Schindler -- Bank of America
Okay. And one real final question. I know that calculates out into the low $1.50 EBITDA per order by Q4 kind of based on your guidance and that's a little bit below what you had said returning to Q3 levels of last year, which was a $1.57. I know just a tiny bit. Was that an intentional change or is this just rounding?
Adam Patnaude -- Head of Investor Relations
I mean, I think that, you know, baked into the guide is above above the $1.50. You know, I think we have to keep it in context. You know, look, we are at $0.98 in the fourth quarter, right. And we're at a $1.23. So we've improved profitability per order by 25% in two quarters and it's in a much slower seasonal quarter. So we've made a lot of progress and we're talking about making another 25% in the next two quarters. So a penny here or a penny there. You know I'm not going to get caught up. And I feel -- we feel really good about the leverage that we're going to get on delivery side and really good about the leverage that we're going to get on the marketing side. And then also good about just in general as order volume goes up, we're going to leverage the fixed investments that we've made, you know, LevelUp and Tapingo technologies. other product and technologists, you know, kind of other overheads. So I think we're talking about pennies here that don't add up to -- that don't add up to a lot.
Nat Schindler -- Bank of America
Great. Thank you guys.
Operator
[Operator Closing Remarks].
Duration: 67 minutes
Call participants:
Adam Patnaude -- Head of Investor Relations
Unidentified Speaker
Mathew Maloney -- CEO
Adam DeWitt -- cfo
Jason Helfstein -- Oppenheimer -- Head of Internet Research
Mark May -- citi
Robert Mollins -- Gordon Haskett
Thomas Champion -- Cowen
Brad Erickson -- Needham & Company
Maria Ripps -- Canaccord -- Analyst
Jeremy Scott -- Mizuho -- ANALYST
Jeremy Scott -- ANALYST
Heath Terry -- Goldman Sachs -- Analyst
Brian Nowak -- Morgan Stanley
Ron Josey -- JMP Securities -- Analyst
Nat Schindler -- Bank of America
