UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 1-36389

GRUBHUB INC.

(Exact name of registrant as specified in its charter)

Delaware	46-2908664
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
111 W. Washington Street, Suite 2100 Chicago, Illinois	60602
(Address of principal executive offices)	(Zip code)

(877) 585-7878

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.0001 par value per share	GRUB	New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes   ☒      No    ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     Yes   ☒      No   ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated filer	☒	Accelerated filer	☐
Non-Accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.     ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes  ☐   No  ☒

As of April 30, 2021, 93,347,973 shares of common stock were outstanding.

GRUBHUB INC.

TABLE OF CONTENTS

PART I
		Page
FINANCIAL INFORMATION
Item 1:	Condensed Consolidated Financial Statements (unaudited)	3
	Condensed Consolidated Balance Sheets as of March 31, 2021 and December 31, 2020	3
	Condensed Consolidated Statements of Operations for the three months ended March 31, 2021 and 2020	4
	Condensed Consolidated Statements of Comprehensive Loss for the three months ended March 31, 2021 and 2020	4
	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2021 and 2020	5
	Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three months ended March 31, 2021 and 2020	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3:	Quantitative and Qualitative Disclosures About Market Risk	25
Item 4:	Controls and Procedures	25
PART II
OTHER INFORMATION
Item 1:	Legal Proceedings	26
Item 1A:	Risk Factors	26
Item 2:	Unregistered Sales of Equity Securities and Use of Proceeds	26
Item 3:	Defaults Upon Senior Securities	26
Item 4:	Mine Safety Disclosures	26
Item 5:	Other Information	26
Item 6:	Exhibits	27
Signatures		28

2

Part I. FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

GRUBHUB INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

(UNAUDITED)

	March 31, 2021			December 31, 2020
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	348,837		$	360,232
Short-term investments		55,824			53,126
Accounts receivable, less allowances for doubtful accounts		104,727			111,802
Income tax receivable		22,229			22,472
Prepaid expenses and other current assets		20,408			24,765
Total current assets		552,025			572,397
PROPERTY AND EQUIPMENT:
Property and equipment, net of depreciation and amortization		217,677			216,146
OTHER ASSETS:
Other assets		54,373			49,201
Deferred tax assets, non-current		142			142
Operating lease right-of-use asset		85,150			88,227
Goodwill		1,007,968			1,007,968
Acquired intangible assets, net of amortization		445,136			454,838
Total other assets		1,592,769			1,600,376
TOTAL ASSETS	$	2,362,471		$	2,388,919
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Restaurant food liability	$	136,280		$	141,802
Accounts payable		16,877			19,859
Accrued payroll		40,871			27,346
Current operating lease liability		17,598			17,897
Other accruals		180,412			149,278
Total current liabilities		392,038			356,182
LONG-TERM LIABILITIES:
Deferred taxes, non-current		16,823			17,777
Noncurrent operating lease liability		100,251			103,416
Long-term debt		494,330			494,103
Other accruals		6			644
Total long-term liabilities		611,410			615,940
Commitments and contingencies
STOCKHOLDERS’ EQUITY:
Preferred Stock, $0.0001 par value. Authorized: 25,000,000 shares as of March 31, 2021 and December 31, 2020; issued and outstanding: no shares as of March 31, 2021 and December 31, 2020.		—			—
Common stock, $0.0001 par value. Authorized: 500,000,000 shares at March 31, 2021 and December 31, 2020; issued and outstanding: 93,306,390 and 93,046,676 shares as of March 31, 2021 and December 31, 2020, respectively		9			9
Accumulated other comprehensive loss		(1,167	)		(1,275	)
Additional paid-in capital		1,260,714			1,243,135
Retained earnings		99,467			174,928
Total stockholders’ equity	$	1,359,023		$	1,416,797
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	2,362,471		$	2,388,919

(See Notes to Condensed Consolidated Financial Statements (unaudited))

3

GRUBHUB INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(UNAUDITED)

	Three Months Ended March 31,
	2021			2020
Revenues	$	550,592		$	362,980
Costs and expenses:
Operations and support		393,486			214,561
Sales and marketing		127,234			90,742
Technology (exclusive of amortization)		31,951			31,273
General and administrative		29,124			38,949
Depreciation and amortization		37,717			33,363
Total costs and expenses		619,512			408,888
Loss from operations		(68,920	)		(45,908	)
Interest expense, net		7,158			6,380
Loss before provision for income taxes		(76,078	)		(52,288	)
Income tax benefit		(617	)		(18,861	)
Net loss attributable to common stockholders	$	(75,461	)	$	(33,427	)
Net loss per share attributable to common stockholders
Basic	$	(0.81	)	$	(0.36	)
Diluted	$	(0.81	)	$	(0.36	)
Weighted-average shares used to compute net loss per share attributable to common stockholders:
Basic		93,215			91,793
Diluted		93,215			91,793

GRUBHUB INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(in thousands)

(UNAUDITED)

	Three Months Ended March 31,
	2021			2020
Net loss	$	(75,461	)	$	(33,427	)
OTHER COMPREHENSIVE INCOME (LOSS)
Foreign currency translation adjustments		108			(643	)
COMPREHENSIVE LOSS	$	(75,353	)	$	(34,070	)

(See Notes to Condensed Consolidated Financial Statements (unaudited))

4

GRUBHUB INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(UNAUDITED)

	Three Months Ended March 31,
	2021			2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(75,461	)	$	(33,427	)
Adjustments to reconcile net loss to net cash from operating activities:
Depreciation		12,294			8,658
Amortization of intangible assets and developed software		25,423			24,705
Stock-based compensation		20,954			20,185
Deferred taxes		(954	)		(2,725	)
Other		(448	)		3,479
Change in assets and liabilities:
Accounts receivable		6,861			(18,333	)
Income taxes receivable		243			(16,311	)
Prepaid expenses and other assets		(83	)		(4,602	)
Restaurant food liability		(5,522	)		20,857
Accounts payable		(3,460	)		4,678
Accrued payroll		13,525			4,277
Other accruals		30,583			26,085
Net cash provided by operating activities		23,955			37,526
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of investments		(31,150	)		(19,790	)
Proceeds from maturity of investments		28,465			32,900
Capitalized website and development costs		(13,848	)		(14,243	)
Purchases of property and equipment		(9,833	)		(19,678	)
Acquisition of other intangible assets		—			(510	)
Other cash flows from investing activities		(200	)		(250	)
Net cash used in investing activities		(26,566	)		(21,571	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings under the credit facility		—			175,000
Taxes paid related to net settlement of stock-based compensation awards		(9,028	)		(8,051	)
Proceeds from exercise of stock options		1,088			1,414
Other cash flows from financing activities		(900	)		—
Net cash provided by (used in) financing activities		(8,840	)		168,363
Net change in cash, cash equivalents, and restricted cash		(11,451	)		184,318
Effect of exchange rates on cash, cash equivalents and restricted cash		66			(600	)
Cash, cash equivalents, and restricted cash at beginning of year		362,897			379,594
Cash, cash equivalents, and restricted cash at end of the period	$	351,512		$	563,312
SUPPLEMENTAL DISCLOSURE OF NON-CASH ITEMS
Cash paid for income taxes	$	—		$	—
Capitalized property, equipment and website and development costs in accounts payable at period end		2,233			3,830
RECONCILIATION OF CASH, CASH EQUIVALENTS, AND RESTRICTED CASH
Cash and cash equivalents	$	348,837		$	560,708
Restricted cash included in other assets		2,675			2,604
Total cash, cash equivalents, and restricted cash	$	351,512		$	563,312

(See Notes to Condensed Consolidated Financial Statements (unaudited)

5

GRUBHUB INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(in thousands, except share data)

(UNAUDITED)

	Common stock
	Shares			Amount		Additional paid-in capital			Accumulated other comprehensive loss			Retained earnings			Total stockholders' equity
	Three Months Ended March 31, 2021
Balance at December 31, 2020		93,046,676		$	9	$	1,243,135		$	(1,275	)	$	174,928		$	1,416,797
Net loss		—			—		—			—			(75,461	)		(75,461	)
Currency translation		—			—		—			108			—			108
Stock-based compensation		—			—		25,519			—			—			25,519
Stock option exercises and vesting of restricted stock units, net of withholdings and other		382,040			—		1,088			—			—			1,088
Shares repurchased and retired to satisfy tax withholding upon vesting		(122,326	)		—		(9,028	)		—			—			(9,028	)
Balance at March 31, 2021		93,306,390		$	9	$	1,260,714		$	(1,167	)	$	99,467		$	1,359,023
	Three Months Ended March 31, 2020
Balance at December 31, 2019		91,576,060		$	9	$	1,164,400		$	(1,628	)	$	330,789		$	1,493,570
Net loss		—			—		—			—			(33,427	)		(33,427	)
Currency translation		—			—		—			(643	)		—			(643	)
Stock-based compensation		—			—		24,994			—			—			24,994
Stock option exercises and vesting of restricted stock units, net of withholdings and other		494,525			—		1,414			—			—			1,414
Shares repurchased and retired to satisfy tax withholding upon vesting		(153,607	)		—		(8,051	)		—			—			(8,051	)
Balance at March 31, 2020		91,916,978		$	9	$	1,182,757		$	(2,271	)	$	297,362		$	1,477,857

(See Notes to Condensed Consolidated Financial Statements (unaudited))

6

GRUBHUB INC.

Notes to Condensed Consolidated Financial Statements (unaudited)

1. Organization

Grubhub Inc., a Delaware corporation, and its wholly-owned subsidiaries (collectively referred to as the “Company”) provide an online and mobile takeout marketplace for restaurant pick-up and delivery orders. The Company connects diners and restaurants through restaurant technology and easy-to-use platforms. Diners enter their delivery address or use geo-location within the mobile applications and the Company displays the menus and other relevant information for restaurants in its network. Orders may be placed directly online, via mobile applications or over the phone. The Company primarily charges restaurant partners a per order commission that is percentage-based. In many markets, the Company also provides delivery services to restaurants on its platform that do not have their own delivery operations. The Company’s takeout marketplace, and related platforms where the Company provides marketing services to generate orders, are collectively referred to as the “Platform”.

2. Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

The accompanying unaudited condensed consolidated interim financial statements include the accounts of Grubhub Inc. and have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the rules and regulations of the United States Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. These unaudited condensed consolidated interim financial statements include all wholly-owned subsidiaries and reflect all normal and recurring adjustments, as well as any other than normal adjustments, that are, in the opinion of management, necessary for a fair presentation of the results for the interim periods and should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020 filed with the SEC on March 1, 2021 (the “2020 Form 10-K”). All significant intercompany transactions have been eliminated in consolidation. Operating results for the three months ended March 31, 2021 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2021.

Use of Estimates

The preparation of condensed consolidated financial statements in accordance with GAAP requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and the related disclosures at the date of the financial statements, as well as the reported amounts of revenue and expenses during the periods presented. These estimates, judgments and assumptions take into account historical and forward-looking factors that the Company believes are reasonable including, but not limited to, the potential impacts arising from the COVID-19 pandemic and measures implemented to prevent its spread. As the extent and duration of the impacts from the COVID-19 pandemic remain unclear, the Company’s estimates and assumptions may evolve as conditions change. Significant items subject to such estimates, judgments and assumptions include revenue recognition, website and internal-use software development costs, goodwill, valuation and recoverability of intangible assets with finite lives and other long-lived assets, stock-based compensation, and income taxes. Actual results could differ significantly from these estimates.  

Changes in Accounting Principle

There have been no material changes to the Company’s significant accounting policies described in the 2020 Form 10-K.

Recently Issued Accounting Pronouncements

There were no recently issued accounting pronouncements that had or are expected to have a material impact on our financial statements.

3. Merger Agreement

On June 10, 2020, the Company entered into an Agreement and Plan of Merger (as amended on September 4, 2020 and March 12, 2021, the “Merger Agreement”) with Just Eat Takeaway.com N.V. (“JET”), Checkers Merger Sub I, Inc., a Delaware corporation and wholly owned subsidiary of JET (“Merger Sub I”), and Checkers Merger Sub II, Inc., a Delaware corporation and wholly owned subsidiary of JET (“Merger Sub II”). Pursuant to the Merger Agreement, Merger Sub I will be merged with and into the Company (the “Initial Merger”), with the Company continuing as the surviving company in the Initial Merger (the “Initial Surviving Company”). Immediately thereafter, the Initial Surviving Company will merge with and into Merger Sub II (the “Subsequent Merger” and, together with the Initial Merger, the “Transaction”), with Merger Sub II continuing as the surviving company.

On and subject to the terms and conditions set forth in the Merger Agreement, at the effective time of the Initial Merger, each issued and outstanding share of our common stock (other than any shares of our common stock owned by the Company, JET, Merger Sub I, Merger Sub II or any other direct or indirect wholly owned subsidiary of JET), will be converted into one share of common

7

GRUBHUB INC.

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

stock, par value $0.0001 per share, of the Initial Surviving Company (the “Initial Surviving Company Stock”). Each such share of Initial Surviving Company Stock will immediately thereafter be automatically exchanged for newly issued American depositary shares of JET (“JET ADS”) representing 0.6710 shares of the share capital of JET with a nominal value of €0.04 per share (“JET Shares”), with each JET ADS representing one-fifth of one JET Share (the “Merger Consideration”).

The registration statement and preliminary proxy statement in respect of the Transaction were publicly filed with the SEC on April 27, 2021, and the Grubhub special stockholder meeting to approve the Transaction and related matters as described in the preliminary proxy statement is expected to take place in June 2021. Subject to the satisfaction of customary closing conditions, Grubhub anticipates closing the Transaction shortly following the Grubhub special stockholder meeting.

The Company incurred certain expenses directly and indirectly related to mergers and acquisitions which were recognized in general and administrative expenses within the condensed consolidated statements of operations of $0.8 million and $0.7 million for the three months ended March 31, 2021 and 2020, respectively.

4. Marketable Securities

The amortized cost, unrealized gains and losses and estimated fair value of the Company’s held-to-maturity marketable securities as of March 31, 2021 and December 31, 2020 were as follows:

	March 31, 2021
	Amortized Cost		Unrealized Gains		Unrealized Losses			Estimated Fair Value
	(in thousands)
Cash and cash equivalents
Commercial paper	$	12,858	$	—	$	(3	)	$	12,855
Short-term investments
Commercial paper		50,203		—		(32	)		50,171
Corporate bonds		5,621		—		(1	)		5,620
Total	$	68,682	$	—	$	(36	)	$	68,646

	December 31, 2020
	Amortized Cost		Unrealized Gains		Unrealized Losses			Estimated Fair Value
	(in thousands)
Cash and cash equivalents
Commercial paper	$	15,498	$	—	$	(3	)	$	15,495
Short-term investments
Commercial paper		46,978		—		(33	)		46,945
Corporate bonds		6,148		1		(1	)		6,148
Total	$	68,624	$	1	$	(37	)	$	68,588

All of the Company’s marketable securities were classified as held-to-maturity investments and have maturities within one year of March 31, 2021. The Company evaluated its marketable securities aggregated by credit rating agency rating, all of which are highly rated, investment grade securities, considering historical investment losses, current market conditions and historical recovery rates of similar securities and determined that no material credit losses were expected as of March 31, 2021.

The gross unrealized losses, estimated fair value and length of time the individual marketable securities were in a continuous loss position for those marketable securities in an unrealized loss position as of March 31, 2021 and December 31, 2020 were as follows:

	March 31, 2021
	Less Than 12 Months					12 Months or Greater				Total
	Estimated Fair Value		Unrealized Loss			Estimated Fair Value		Unrealized Loss		Estimated Fair Value		Unrealized Loss
	(in thousands)
Commercial paper	$	63,026	$	(35	)	$	—	$	—	$	63,026	$	(35	)
Corporate bonds		4,119		(1	)		—		—		4,119		(1	)
Total	$	67,145	$	(36	)	$	—	$	—	$	67,145	$	(36	)

8

GRUBHUB INC.

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

	December 31, 2020
	Less Than 12 Months					12 Months or Greater				Total
	Estimated Fair Value		Unrealized Loss			Estimated Fair Value		Unrealized Loss		Estimated Fair Value		Unrealized Loss
	(in thousands)
Commercial paper	$	62,440	$	(36	)	$	—	$	—	$	62,440	$	(36	)
Corporate bonds		4,569		(1	)		—		—		4,569		(1	)
Total	$	67,009	$	(37	)	$	—	$	—	$	67,009	$	(37	)

The Company recognized interest income during the three months ended March 31, 2021 and 2020 of $0.1 million and $0.9 million, respectively, within net interest expense on the condensed consolidated statements of operations. During the three months ended March 31, 2021 and 2020, the Company did not recognize any other-than-temporary impairment losses related to its marketable securities.

The Company’s marketable securities are classified within Level 2 of the fair value hierarchy (see Note 13, Fair Value Measurement, for further details).

5. Goodwill and Acquired Intangible Assets

The components of acquired intangible assets as of March 31, 2021 and December 31, 2020 were as follows:

	March 31, 2021							December 31, 2020
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Value		Gross Carrying Amount		Accumulated Amortization			Net Carrying Value
	(in thousands)
Restaurant relationships	$	492,791	$	(165,316	)	$	327,475	$	492,791	$	(158,885	)	$	333,906
Diner acquisition		48,293		(31,982	)		16,311		48,293