Grubhub (GRUB) devoured analyst expectations by posting a 41% jump in pandemic-fueled second-quarter revenue that pushed key business metrics to large gains.
Yet it was still a money-losing operation, notching adjusted net losses of $16 million, or $0.17 per share, worse than the $37,000 loss, or breakeven on a per share basis, it recorded in the first quarter and a complete reversal of the $25 million, or $0.27-per-share profit, it put up a year ago. Analysts had forecast an $0.18-per-share loss.
However, adjusted earnings before interest, taxes, depreciation, and amortization of $13.3 million, though down 76% year over year, was far better than the $5 million in adjusted EBITDA it had guided toward in the first quarter.
Ready for the next stage of growth
Grubhub is poised to be acquired by Just Eat Takeaway and the third-party delivery specialist is setting itself up to be a better-positioned business in the industry for its new owner, albeit a loss-generating one.
Daily average grubs, or the number of orders placed by customers, jumped 32% in the quarter to 647,100, a strong showing considering it had lost 1% of its DAG in the first quarter. DAG growth actually accelerated each month in the quarter, growing 20% in April, 35% in May, and 40% in June.
That helped push gross food sales up an impressive 59% in the quarter to $2.3 billion as it added more partnered restaurants to its platform in the first half of 2020 than it did during all of 2019.
Third-party delivery has become a cutthroat business that is now in the midst of consolidation because, as Grubhub's earnings show, it is difficult to make a profit.