Grubhub Swings to First-Quarter Loss on 12% Higher Revenue

GrubHub, the Chicago food-delivery specialist, swung to a first-quarter loss from a year-earlier profit on 12% higher revenue.
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GrubHub,  (GRUB) - Get Report the Chicago food-delivery specialist, swung to a first-quarter loss from a year-earlier profit on 12% higher revenue.

The loss was 36 cents a share compared with a profit of 7 cents in the year-earlier quarter. 

On an adjusted basis Grubhub broke even in the latest quarter compared with an adjusted profit of 30 cents a share a year earlier.

Revenue reached $363 million from $323.8 million.

A survey of analysts by FactSet produced consensus estimates of a loss of 33 cents a share, or an adjusted loss of 4 cents a share, on revenue of $358.1 million.

At last check GrubHub shares were trading down 3.8% at $48.90. They closed the regular session up 6.4% at $50.83.

"The restaurant industry is facing enormous challenges in light of the difficult, but necessary, steps taken to keep us safe as we fight covid-19," Founder and Chief Executive Matt Maloney said in a statement. 

"Grubhub is using nearly all of our profits in the second quarter to generate as many additional orders for our restaurant partners as possible. We hope that the darkest days are behind our restaurant partners and they can start focusing on the recovery."

The stock has gyrated sharply in the past year, bouncing off a low of $29.35 in mid-March but still more than a third below its 52-week high above $80 set late last July.

Three weeks ago Grubhub withdrew its financial guidance for the year after it described a volatile first quarter.

The covid-19 pandemic has focused consumers, and investors, on the food-delivery business.

It has enabled people to more easily obtain restaurant meals during the shelter-at-home period of the pandemic.

And it has given at least some restaurants the opportunity to maintain a portion of their business and keep at least some of their staffers working.

But the industry also has come under enormous fire for charging restaurants fees sharp enough to render many of their orders unprofitable.

Barron's also recently pointed out that "food delivery is a tough business. It's competitive and undifferentiated, with a difficult path to sustainable profits."

GrubHub has got plenty of rivals, including Uber Eats  (UBER) - Get Report as well as closely held DoorDash and Postmates.