Stockholders' Equity

3 Months Ended

Mar. 31, 2014

Stockholders' Equity

8. Stockholders’ Equity

As of March 31, 2014 and December 31, 2013, the Company was authorized to issue two classes of stock: common stock and Series A preferred stock. Each share of Series A preferred stock was convertible, at the option of the holder thereof, into common stock on a one-for-one basis, subject to adjustment as defined in the Company’s amended and restated certificate of incorporation. The Company entered into a stockholders agreement in 2013 with certain stockholders. The agreement prevented those stockholders from transferring their shares without the consent of a majority of the stockholders.

On April 4, 2014, the Company completed the IPO in which the Company issued and sold 4,000,000 shares of common stock at a public offering price of $26.00 per share. The Company received net proceeds of $95.5 million after deducting underwriting discounts and commissions of $6.5 million and other offering expenses of approximately $2.0 million. Upon the closing of the IPO, the stockholder’s agreement ceased to be in effect.

Common Stock

Each holder of common stock will have one vote per share of common stock held on all matters that are submitted for stockholder vote. Upon liquidation, the common stock was junior to the rights and preferences of the Series A preferred stock as of March 31, 2014 and December 31, 2013. At March 31, 2014 and December 31, 2013, there were 500,000,000 and 165,000,000 shares of common stock authorized, respectively. At March 31, 2014 and December 31, 2013, there were 54,083,204 and 53,757,437 shares issued and outstanding, respectively. The Company did not hold any shares as treasury shares as of March 31, 2014 or December 31, 2013.

Series A Preferred Stock

In the event of a liquidation event, the holders of Series A preferred stock were entitled to receive pari passu to each other, and prior in preference to any distribution of any assets of the Company to the holders of common stock. The Series A preferred stock had a liquidation preference of an amount per share equal to the original Series A preferred stock issue price. The aggregate liquidation preference of the Series A preferred stock as of March 31, 2014 and December 31, 2013 was approximately $86.2 million.

Upon the closing of the IPO on April 4, 2014, all shares of the Company’s then-outstanding convertible Series A preferred stock automatically converted on a one-for-one basis into an aggregate of 19,284,113 shares of common stock.

Redeemable Common Stock

As of March 31, 2014 and December 31, 2013, there were 1,344,236 shares of common stock with put rights that would require the Company to repurchase these shares at fair value (as defined in the stockholders agreement) determined at the redemption date. As the redemption price is equivalent to the fair value of the instrument, the Company adjusted the carrying value of the redeemable common stock to its fair value with an adjustment to equity. The fair value of the redeemable common stock increased to $35.0 million as of March 31, 2014 from $18.4 million at December 31, 2013. The Company had an annual redemption limit of $4.0 million. These put rights were terminated upon the closing of the IPO on April 4, 2014.

The Company’s equity as of December 31, 2013 and March 31, 2014, and changes during the three months ended March 31, 2014, were as follows:

	GrubHub Inc.			GrubHub Inc. Pro Forma (Note 2)
	(in thousands)
Balance at December 31, 2013	$	557,375		$	557,375
Net income		4,353			4,353
Currency translation		49			49
Termination of put rights of redeemable common stock in connection with the IPO		—			34,950
Issuance of common stock in connection with the IPO, net of issuance costs		—			95,461
Change in fair value of redeemable common stock		(16,535	)		(16,535	)
Stock-based compensation		2,403			2,403
Stock option exercises, net of withholdings and other		1,368			1,368
Common stock repurchases		(810	)		(810	)
Balance at March 31, 2014	$	548,203		$	678,614