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Investor Presentation Grubhub

Investor Presentation Grubhub
Investor Presentation June 2014 Safe Harbor Statement This presentation contains “forwardlooking” statements, within the meaning of the federal securities laws, that are based on our management’s beliefs and assumptions and on information currently available to management. Forwardlooking statements include information concerning our possible or assumed future results of operations, business strategies, financing plans, competitive position, industry environment, potential growth opportunities, potential market opportunities and the effects of competition. Forwardlooking statements include all statements that are not historical facts and can be identified by terms such as “anticipates,” “believes,” “could,” “seeks,” “estimates,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,” “will,” “would” or similar expressions and the negatives of those terms. Forwardlooking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forwardlooking statements. Forwardlooking statements represent our management’s beliefs and assumptions only as of the date of this presentation. You should read the prospectus filed with the Securities and Exchange Commission (the “SEC”) on April 7, 2014, including the Risk Factors set forth therein and the documents that we have filed as exhibits to the registration statement, of which the prospectus is a part, and any further disclosures we make on related subjects in our quarterly reports on Form 10Q and current reports on Form 8K filed with the SEC completely and with the understanding that our actual future results may be materially different from what we expect. Except as required by law, we assume no obligation to update these forwardlooking statements publicly, or to update the reasons actual results could differ materially from those anticipated in the forwardlooking statements, even if new information becomes available in the future. This presentation includes certain nonGAAP financial measures as defined by SEC rules. We have provided a reconciliation of those measures to the most directly comparable GAAP measures, which is available in the Appendix. In this presentation, unless the context otherwise requires, financial results and operating metrics (i) prior to the merger on August 8, 2013 reflect the combined historical results for GrubHub and Seamless, which operated as separate companies, and (ii) on or after August 8, 2013 reflect the results of GrubHub Inc. (the merged company). 2 Company Overview Matt Maloney CEO Our Mission is to Make Takeout Better Hungry Diners Restaurants 4 Largest Online and Mobile Takeout Marketplace Combined Revenues (MM) 1.7B 170 (1) +49 Y/Y Gross Food Sales Run rate 119 78 59 39 3.85 MM (1) Active Diners 2011 2012 2013 Q1 2013 Q1 2014 Combined Adjusted EBITDA (MM) 181,200 40 (1) Daily Average Grubs +192 Y/Y 16 10 6 6 30,000 / 700 (1) (1) Restaurants Cities 2011 2012 2013 Q1 2013 Q1 2014 (1) As of Q1 2014 5 Massive, Untapped Highly Fragmented Market Online 5 (1) 95 Paper Menus and Phones 350,000 67B (1) Independent restaurants Spent by consumers on Online vs. callin takeout (1) (2) takeout annually orders Total U.S. Addressable Market 8.5 9.5B (3) 13 14 commission rate (1) Based on data from a 2013 industry report prepared by Euromonitor International and our analysis of such data (2) Based on 2013 GrubHub Gross Food Sales relative to the 67Bn takeout market in 2012 and GrubHub’s size relative to competitors based on ComScore data on total visits to online delivery websites from the three months ended January 31, 2014 6 (3) Commission rate represents a range of GrubHub Inc. commission rates Takeout: Broken for Restaurants Reaching Hungry Diners is Difficult Marketing Requires Upfront Expense Capital and Resource Constrained Limited Technology Expertise 7 Takeout: Broken for Diners Limited Choices Frustrating Phone Calls Long Hold Times ErrorProne 8 GrubHub Makes Takeout Better 9 Why Restaurants Love GrubHub More Orders at Full Menu Prices Higher Margin Takeout Reach New Customers Low Risk, High Return Insight from Order Data 10 Why Diners Love GrubHub Expanded Choices Convenience Control and Transparency Superior Service Free to Use 11 Twosided Network Perpetuates Growth (1) (2) Number of Restaurants Active Diners Combined (000s) Combined (MM) 3.4 30 2.3 21.3 1.6 14.0 2011 2012 Now 2011 2012 2013 (3) (4) Gross Food Sales Daily Average Grubs Combined (B) Combined (000s) 135.5 1.3 93.6 0.9 59.2 0.5 2011 2012 2013 2011 2012 2013 (1) Totals for the years ended December 31, 2011 and 2012 reflect restaurants on GrubHub and Seamless platforms excluding estimated duplicate restaurants. Restaurant total for the year ended December 31, 2013 reflects restaurants for GrubHub Inc. (2) Calculated as the number of unique diner accounts from which an order has been placed in the past twelve months through our platform (3) Calculated as the total value of food, beverages, taxes, prepaid gratuities, and any delivery fees for all revenue generating orders processed through our platform during the twelve months ended December 31 12 (4) Calculated as the number of revenue generating orders placed on our platform divided by the number of days for a given period Long History of Product Innovation Restaurant Delivery Driver Corporate Mobile Technology Tools 13 Mobile Products Reinforce Growth 44 of Orders in Q1 2014 vs. 35 of (1) Orders in Q1 2013 Same Commission Rate as Desktop Increases Use Cases (1) Q1 2013 data reflects Seamless mobile orders only, while Q1 2014 data reflects orders for GrubHub Inc. (the merged company) 14 Marketing Raises Awareness Combined Advertising Spend (MM) 31 27 Substantial Awareness Opportunity Multichannel Strategy Reaches 16 Potential Diners On and Offline National and Local Outreach 2011 2012 2013 15 GrubHub Seamless = Massive Scale, Reach and Growth Scale and Growth Unparalleled Geographic Reach More Efficient Marketing and Sales Product and Technology Fit 16 RestaurantDriven Pricing Restaurants Decide their own Pricing Restaurants can Impact Placement with Pricing GrubHub Historically seen Improvement of Takerates in Markets over Time Launched on Seamless in April 2014 with Promising Results 17 Financials Adam DeWitt CFO Strong Financial Model Transactional Model at Scale Strong Growth Demonstrated Profitability and Operating Leverage Capital Efficient 19 Consistent Growth in Key Metrics… Active Diners Daily Average Grubs Combined (MM) Combined (000s) +49 Y/Y +40 Y/Y 3.9 181.2 3.4 135.5 2.6 129.1 2.3 93.6 1.6 59.2 2011 2012 2013 Q1 Q1 2011 2012 2013 Q1 Q1 2013 2014 2013 2014 20 …Has Led to Strong Topline Growth Gross Food Sales Combined Revenue Combined (B) (MM) 1.3 170 0.9 119 +44 Y/Y +49 Y/Y 78 0.5 0.4 59 0.3 39 2011 2012 2013 Q1 Q1 2011 2012 2013 Q1 Q1 2013 2014 2013 2014 21 Attractive Unit Economics Incremental Margin per Order 74 100 (1) 26 Net Revenue Credit Card Processing Care and Other Operations 74 Processing Incremental Margin (1) Reflects operations and support as a percentage of revenues for Q1 2014 22 Robust Operating Leverage (1) Combined Financials () 2011 2012 2013 Q1 2014 Revenue 100 100 100 100 Sales and Marketing 35 36 28 27 Operations and Support 26 28 27 26 Technology 11 13 11 9 General Administrative 26 18 14 14 (2) Adjusted EBITDA Margin 8 9 23 28 (1) Financial results (i) prior to the merger on August 8, 2013 reflect the combined historical results for GrubHub and Seamless, which operated as separate companies, and (ii) on or after August 8, 2013 reflect the results of GrubHub Inc. (the merged company) . Please note individual lines will not sum to 100 as categories include stockbased compensation (2) Adjusted EBITDA is defined as net income adjusted to exclude merger and restructuring costs, income taxes, depreciation and amortization and stockbased compensation expense 23 Strong Conversion to Cash Flow Free Cash Flow – Q1 2014 (MM) 26.0 (2.2) Business Funds Itself – 12.2 Negative Working Capital 16.4 (0.4) Low CapEx Requirements No Debt (1) Adjusted Cash Change in CapEx FCF (1) EBITDA Taxes Working (2) Capital (1) CapEx represents the combined purchases of property and equipment and capitalized web development in Q1 2014. (2) Represents the working capital of GrubHub Inc. as of March 31, 2014 minus the working capital as of December 31, 2013. 24 Appendix (1) Reconciliation of Adjusted EBITDA (MM) CY 2011 CY 2012 CY 2013 Q1 2013 Q1 2014 Net Income 2.0 (2.3) 1.5 0.7 4.4 (2) Income Taxes (5.2) 0.8 8.1 0.8 3.9 Depreciation and Amortization 4.7 8.2 15.0 2.4 5.5 EBITDA 1.5 6.8 24.6 3.9 13.7 (3) Merger and Restructuring costs — — 9.3 0.8 0.3 Stockbased Compensation 1.2 3.6 5.8 1.0 2.4 Common Stock Redemption 3.5 — — — — Adjusted EBITDA 6.2 10.4 39.7 5.6 16.4 (1) Financial results (i) prior to the merger on August 8, 2013 reflect the combined historical results for GrubHub and Seamless, which operated as separate companies, and (ii) on or after August 8, 2013 reflect the results of GrubHub Inc. (the merged company). Financial results also exclude non cash acquisition adjustments related to stockbased compensation (2) The increase in income tax expense was primarily attributable to a reversal of deferred tax liability of 8.4MM in 2011 associated with the June 2011 sale of preferred stock to SLW Investors, LLC offset by 2011 income tax paid of 2.2MM, which represents the income tax expense from January 1, 2011 through May 31, 2011. For the period January 1, 2012 through October 27, 2012, the Company was a passthrough entity for income tax purposes. Immediately following the Merger Date, 100 of our taxable income is subject to income tax (3) Merger and restructuring costs include transaction and integration related costs, such as legal and accounting costs, associated with the Merger, and 26 restructuring costs Unaudited Combined Financials – 2013 2014 (MM unless otherwise noted) Q1 2013 Q2 2013 Q3 2013 Q4 2013 2013 Total Q1 2014 Active Diners – End of Period (000s) 2,577 2,782 3,050 3,421 3,421 3,851 Daily Average Grubs (000s) 129.1 130.1 129.8 152.9 135.5 181.2 Gross Food Sales (000s) 300.0 306.7 309.2 370.0 1,285.9 433.0 Net Revenue 39.4 40.7 41.0 49.0 170.1 58.6 (1) Operating Expenses Sales and Marketing 14.9 10.6 10.4 12.4 48.3 16.1 Operations and Support 10.7 10.8 11.2 12.9 45.6 15.1 Technology 4.3 4.2 5.1 5.6 19.2 5.3 Depreciation Amortization 2.4 2.6 4.1 6.0 15.0 5.5 General Administrative 4.8 5.2 5.9 7.1 23.1 8.0 Total Operating Expenses 37.2 33.4 36.7 43.9 151.2 50.1 Operating Pretax Income 2.2 7.3 4.3 5.1 18.9 8.5 (2) Merger and Restructuring Costs 0.8 6.7 1.7 0.2 9.3 0.3 Total Pretax Income 1.5 0.6 2.6 4.9 9.6 8.2 (3) Adjusted EBITDA 5.6 10.8 10.3 13.0 39.7 16.4 (1) Excludes noncash acquisition adjustments related to stockbased compensation (2) Includes transaction, integration and restructuring related costs associated with the merger of GrubHub and Seamless, which operated as separate companies until August 8, 2013 (3) Excludes deal and restructuring costs and stockbased compensation expense 27 Unaudited Combined Financials – 2012 (MM unless otherwise noted) Q1 2012 Q2 2012 Q3 2012 Q4 2012 2012 Total Active Diners – End of Period (000s) 1,779 1,922 2,109 2,321 2,321 Daily Average Grubs (000s) 89.3 89.4 90.5 105.9 93.6 Gross Food Sales (000s) 204.3 205.6 211.5 249.6 871.0 Net Revenue 28.0 28.4 29.5 33.1 118.9 (1) Operating Expenses Sales and Marketing 10.0 10.5 9.7 11.9 42.2 Operations and Support 7.7 8.2 8.1 9.1 33.2 Technology 3.2 4.1 4.2 4.2 15.7 Depreciation Amortization 1.9 2.0 2.2 2.1 8.2 General Administrative 5.5 5.3 4.9 5.4 21.0 Total Operating Expenses 28.4 30.1 29.1 32.7 120.3 Operating Pretax Income (0.4) (1.8) 0.3 0.4 (1.5) (2) Merger and Restructuring Costs – – – – – Total Pretax Income (0.4) (1.8) 0.3 0.4 (1.5) (3) Adjusted EBITDA 2.4 1.3 3.3 3.4 10.4 (1) Excludes noncash acquisition adjustments related to stockbased compensation (2) Includes transaction, integration and restructuring related costs associated with the merger of GrubHub and Seamless, which operated as separate companies until August 8, 2013 (3) Excludes deal and restructuring costs and stockbased compensation expense 28
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08-07-2017