The company’s revenue fell short due to increased competition from competitors.
On Tuesday, GrubHub reported its third-quarter earnings, and the results weren’t pretty. The company’s revenue, earnings, and guidance all fell below Wall Street expectations.
As a result, five different analysts downgraded the company. Some analysts, like Bank of America and Oppenheimer, gave the stock a double downgrade. This means they went from recommending to buy shares of Grubhuh to giving it a sell rating.
Here is an overview of the company’s third-quarter earnings and what we can expect from Grubhub going forward.
What happened to GrubHub during Q3?
During the third quarter, GrubHub’s revenue rose 30% to reach $322 million. Unfortunately, investors were expecting the company’s revenue to surpass $330 million. Earnings did fall in line with Wall Street expectations at 27 cents per share.
GrubHub’s orders decreased by 15% from a year earlier, which is bad news for a meal delivery app. And this is in addition to the 11% it fell during the second quarter.
But for investors, the real kicker was the company’s fourth-quarter guidance. Going forward, management expects revenue to fall between $315 and $335 million. This is well below the forecasted guidance of $388 million.
And the company expected its adjusted EBIDTA to expected to fall between $15 million and $25 million. This would represent a substantial decline from a year earlier.
According to a Bank of America analyst, the problem is that there’s no real sense of customer loyalty when it comes to meal delivery apps. Companies continue to flood the market, and consumers pick the service that offers them the best discounts and promotions.
What’s next for GrubHub?
In a note to investors, GrubHub CEO Matt Maloney said that the company has a plan for dealing with rising competition. Going forward, the company plans to focus on adding non-partner restaurants and expanding its national chain integrations.
Maloney says the company will be trying a number of different strategies over the next year to see what will work. However, it remains to be seen whether this will help GrubHub regain the competitive edge it held in the past.