Grubhub announced its earnings for Q3 2017, in which it closed its acquisitions of New England-based Foodler and part of Groupon’s OrderUp.
The company saw revenue grow 32% year-over-year (YoY) from $123.5 million to $163.1 million in Q3, while its number of active diners jumped 28% YoY to 9.81 million. Additionally, its gross food sales grew 18% YoY to $867 million. However, despite its record-breaking revenue and other positive metrics, net income dropped 1% to $13 million, and Grubhub saw YoY growth in gross food sales decelerate for the fourth consecutive quarter.
Grubhub’s acquisitions may bolster its overall performance going forward. Grubhub spent approximately $360 million on its Q3 acquisitions and Yelp’s Eat24, which it purchased in Q4. It has likely already received a boost from Foodler, which will add around $80 million in annualized gross food sales in 2017, and OrderUp surely added more.
These will continue to help GrubHub, and with the addition of Eat24’s gross food sales of $600 million, the company should be well positioned to build on its strong Q3 revenue growth. That’s especially true given the company’s long-standing history of quickly integrating its acquisitions into the Grubhub platform.
Absorbing its competition may be a winning strategy in the increasingly crowded food delivery market. Even before acquiring Eat24, Grubhub was the most popular food delivery option, with 34% of delivery customers using the service, and 16% using Eat24.
But UberEATS and Amazon’s food delivery business are not far behind, and they’re growing — UberEATS is on pace for $3 billion in annual sales, which is on par with Grubhub’s 2016 performance, and Amazon is about to start testing food ordering from its app. These companies shouldn’t be taken lightly, and Grubhub may do well to acquire as many viable competitors as possible to build a larger lead as the two competitors take off.
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