As anybody curled up on a couch on a rainy night knows, food delivery is a solid business to be in. And GrubHub, the company that owns Seamless as well as GrubHub.com, is getting more food delivered than ever before.
The company, which went public in April, had record food sales of $424 million in the three months ending September, a 37% jump from the same quarter last year. At that rate, it's on track to sell $1.7 billion worth of takeout per year.
That's either a lot, or not much, depending on how you look at it. "With over 95% of the takeout market still being served by paper menu and telephone, we are still in the very early stages," of taking over the market, GrubHub CEO Matthew Moloney said in an earnings call this morning.
And like many startups that work as platforms that connect products (in this case, delivery food) with consumers (homebound urbanites), the vast majority of the money it handles goes straight to the sellers, leaving the company with $61.9 million in revenue this quarter, a 51% jump from a year ago.
And like many startups, it's barely eeking out a profit, thanks to high and growing marketing costs. Its total costs jumped 31% to $50 million, and its sales and marketing costs soared some 43%, faster than its revenue, leaving the company with a meager profit of $6.5 million (although that is many times the $1.2 million it earned a year ago). It has actually reduced its advertising spending from three months ago, Maloney said in a statement, because the third quarter tends to be slower.
Those ads seem to be working though: The company said it has 4.6 million "active diners" making orders through the site, making an average of 173,000 orders per day. That's up from 3.1 million diners and 130,000 daily orders a year ago.
The stock is up about 12% since its April IPO
"GrubHub delivered strong third quarter results featuring record revenues and adjusted EBITDA driven by growth in all of our key business metrics," Maloney said in a statement.
Investors were happy with the company's earnings report, with its stock up just over 2%, or $.81, in early trading.
Matthew Zeitlin is a business reporter for BuzzFeed News and is based in New York. Zeitlin reports on Wall Street and big banks.
Contact Matthew Zeitlin at firstname.lastname@example.org.
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