What happened

Shares of GrubHub (NYSE:GRUB) fell more than 12% on Tuesday, following the release of second-quarter results for the food ordering and delivery service. 

So what

Revenue surged 36% year over year to $325 million, fueled by a 20% rise in gross food sales, to $1.5 billion.

"The team continued executing in the second quarter, adding thousands of new, high-quality independent and enterprise restaurants, and growing our active diner base to more than 20 million," CEO Matt Maloney said in a press release. 

But higher costs related to the company's expansion efforts are taking a toll on profits. Total costs soared 55% to $319 million in the second quarter. In turn, operating and net income declined to $6.1 million and $1.3 million, respectively, down from $34.3 million and $30.1 million in the year-ago period.

A person handing a container of food to another person

GrubHub is delivering more food but less profit. Image source: Getty Images.

Moreover, non-GAAP (adjusted) earnings per share came in at $0.27. That was below Wall Street's estimates for adjusted EPS of $0.30. 

GrubHub also lowered its full-year guidance for adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) to between $235 million and $250 million, down from a prior forecast of $235 million to $265 million. 

Now what

GrubHub is facing intensifying competition from the likes of Uber Eats, DoorDash, and Postmates. Yet Maloney says he remains "excited about the trajectory" of the business. "Restaurants are increasingly valuing the incremental sales and products we provide, while diners highly regard our robust restaurant selection and consistently low transaction fees," he said.

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