Grub Hub 10K FY2016 excerpts PDF

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GRUBHUB INC. 2016

ANNUAL REPORT

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549

FORM 10-K (Mark One)

⌧

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2016 OR



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

Registrant’s telephone number, including area code: (877) 585-7878 Securities registered pursuant to Section 12(b) of the Act: Title of Each Class

Name of Each Exchange on Which Registered

Common Stock, $0.0001 par value per share New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES ⌧ NO  Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. YES  NO ⌧ Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). YES ⌧ NO  Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405) is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definition of “large accelerated filer”, “accelerated filer”, and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer

⌧

Accelerated filer



Non-accelerated filer  (Do not check if a smaller reporting company) Smaller reporting company  Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES  NO ⌧ The aggregate market value of the voting and non-voting common equity held by non-affiliates of the Registrant, based on the closing price of the shares of common stock on The New York Stock Exchange on June 30, 2016, was $2,233,206,117. The number of shares of Registrant’s Common Stock outstanding as of February 17, 2017 was 85,903,320. Portions of the Registrant’s Definitive Proxy Statement relating to the Annual Meeting of Stockholders, scheduled to be held on May 11, 2017, are incorporated by reference into Part III of this Annual Report on Form 10-K.

GRUBHUB INC. Consolidated Statements of Operations (in thousands, except per share data) Year Ended December 31, 2015

2016

Revenues Costs and expenses: Sales and marketing Operations and support Technology (exclusive of amortization) General and administrative Depreciation and amortization Total costs and expenses Income before provision for income taxes Provision for income taxes Net income Preferred stock tax distributions Net income attributable to common stockholders Net income per share attributable to common stockholders: Basic Diluted Weighted-average shares used to compute net income per share attributable to common stockholders: Basic Diluted

$

493,331

$

361,825

$

110,323 171,756 42,454 49,753 35,193 409,479 83,852 34,295 49,557 — 49,557

$ $

0.58 0.58

85,069 86,135

(See Notes to Consolidated Financial Statements)

43

2014

$

253,873

$

91,150 107,424 32,782 40,506 28,034 299,896 61,929 23,852 38,077 — 38,077

$

66,201 62,509 25,185 32,307 22,687 208,889 44,984 20,721 24,263 (320) 23,943

$ $

0.45 0.44

$ $

84,076 85,706

0.33 0.30

73,571 81,698

GRUBHUB INC. Consolidated Statements of Comprehensive Income (in thousands)

2016

Net income OTHER COMPREHENSIVE LOSS Foreign currency translation adjustments COMPREHENSIVE INCOME

$

49,557

$

(1,474) 48,083 $

(See Notes to Consolidated Financial Statements)

44

Year Ended December 31, 2015

$

38,077

2014

$

(342) 37,735 $

24,263 (394) 23,869

GRUBHUB INC. Consolidated Balance Sheets (in thousands, except share data) December 31, 2016

ASSETS CURRENT ASSETS: Cash and cash equivalents Short term investments Accounts receivable, less allowances for doubtful accounts Prepaid expenses Total current assets PROPERTY AND EQUIPMENT: Property and equipment, net of depreciation and amortization OTHER ASSETS: Other assets Goodwill Acquired intangible assets, net of amortization Total other assets TOTAL ASSETS LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES: Restaurant food liability Accounts payable Accrued payroll Taxes payable Other accruals Total current liabilities LONG TERM LIABILITIES: Deferred taxes, non-current Other accruals Total long term liabilities Commitments and contingencies STOCKHOLDERS’ EQUITY: Series A Convertible Preferred Stock, $0.0001 par value. Authorized: 25,000,000 shares as of December 31, 2016 and December 31, 2015; issued and outstanding: no shares as of December 31, 2016 and December 31, 2015.

$

$

$

45

169,293 141,448 42,051 3,482 356,274

46,555

19,082

4,530 436,455 313,630 754,615 1,197,507

3,105 396,220 285,567 684,892 1,060,248

83,349 7,590 7,338 865 11,348 110,490

$

$

9 (2,078) 805,731 168,457 972,119 1,197,507

64,326 8,189 4,841 426 11,830 89,612 87,584 5,456 93,040

—

$ $

(See Notes to Consolidated Financial Statements)

$

108,022 6,876 114,898

Common stock, $0.0001 par value. Authorized: 500,000,000 shares at December 31, 2016 and December 31, 2015; issued and outstanding: 85,692,333 and 84,979,869 shares as of December 31, 2016 and December 31, 2015, respectively

Accumulated other comprehensive loss Additional paid-in capital Retained earnings Total Stockholders’ Equity TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

239,528 84,091 60,550 12,168 396,337

December 31, 2015

—

$ $

8 (604 ) 759,292 118,900 877,596 1,060,248

GRUBHUB INC. Statements of Cash Flows (in thousands) Year Ended December 31, 2015

2016

CASH FLOWS FROM OPERATING ACTIVITIES Net income Adjustments to reconcile net income to net cash from operating activities: Depreciation Provision for doubtful accounts Deferred taxes Amortization of intangible assets Stock-based compensation Deferred rent Other Change in assets and liabilities, net of the effects of business acquisitions: Accounts receivable Prepaid expenses and other assets Restaurant food liability Accounts payable Accrued payroll Other accruals Net cash provided by operating activities CASH FLOWS FROM INVESTING ACTIVITIES Purchases of investments Proceeds from maturity of investments Capitalized website and development costs Purchases of property and equipment Acquisitions of businesses, net of cash acquired Acquisition of other intangible assets Other cash flows from investing activities Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Net proceeds from the issuance of common stock Repurchases of common stock Proceeds from exercise of stock options Excess tax benefits related to stock-based compensation Taxes paid related to net settlement of stock-based compensation awards Payments for debt issuance costs Preferred stock tax distributions Net cash provided by financing activities Net change in cash and cash equivalents Effect of exchange rates on cash Cash and cash equivalents at beginning of year Cash and cash equivalents at end of the period SUPPLEMENTAL DISCLOSURE OF NON CASH ITEMS Fair value of common stock issued for acquisitions Cash paid for income taxes Capitalized property, equipment and website and development costs in accounts payable at period end Cashless exercise of stock options Settlement of receivable through cashless acquisition of treasury shares in connection with the net settlement of stock-based awards

$

$ $

49,557

38,077

$

24,263

8,921 1,102 1,027 26,272 23,559 1,286 (406)

5,085 850 (3,835) 22,949 13,450 32 529

5,032 426 4,612 17,655 9,393 (17) 167

(17,488) (8,765) 16,451 (3,204) 1,819 (2,453) 97,678

(4,343) 242 (29,409) 3,312 (2,104) (80) 44,755

(7,394) (1,669) 13,414 (259) 4,243 3,038 72,904

(226,694) 284,662 (12,809) (24,087) (65,849) (250) (492) (45,519)

(220,667) 189,872 (7,137) (4,150) (73,907) — (408) (116,397)

(113,156) 1,500 (3,431) (3,653) — — — (118,740)

— — 11,919 27,830 (345) — — 39,404 (32,238) (265) 201,796 169,293

142,541 (116) 8,322 12,975 (2,070) — (320) 161,332 115,496 (242) 86,542 201,796

— (14,774) 13,468 24,906 (2,779) (1,477) — 19,344 71,503 (1,268) 169,293 239,528 $ — 8,722 2,583 —

(See Notes to Consolidated Financial Statements)

46

$

2014

—

$

15,980 —

$ $

— 1,326

927 —

— 1,054

(345)

(3,123)

GRUBHUB INC. Consolidated Statements of Changes in Stockholders’ Equity and Redeemable Common Stock (in thousands, except share data)

Balance December 31, 2013 Net income Currency translation Termination of put rights of redeemable common stock, in connection with the IPO Conversion of preferred stock upon IPO Issuance of common stock, net of issuance costs Change in fair value of redeemable common stock Stock-based compensation Tax benefit related to stock-based compensation Stock option exercises, net of withholdings and other Preferred stock tax distributions Common stock repurchases and retirements Balance December 31, 2014 Net income Currency translation Stock-based compensation Tax benefit related to stock-based compensation Stock option exercises, net of withholdings and other Issuance of restricted stock awards Issuance of common stock, acquisitions Shares repurchased and retired to satisfy tax withholding upon vesting Balance at December 31, 2015 Net income Currency translation Stock-based compensation Tax benefit related to stock-based compensation Stock option exercises and vesting of restricted stock units, net of withholdings and other Repurchases of common stock Shares repurchased and retired to satisfy tax withholding upon vesting Balance at December 31, 2016

Common stock Shares Amount

Preferred stock Shares Amount

53,757,437 — —

5 — —

19,284,113 — —

1,344,236 19,284,113 5,250,000

— 2 1

— (19,284,113 ) —

— — —

— — —

2,416,651 — (147,112 ) 81,905,325 — — — —

$

$

2 — —

APIC $

500,356 — —

Accumulated Other Comprehensive Income (Loss) $

132 — (394 )

Retained earnings $

56,880 24,263 —

Total stockholders' equity $

557,375 24,263 (394 )

Redeemable common stock Shares Amount 1,344,236 — —

$

— (2 ) —

34,950 — 142,540

— — —

— — —

34,950 — 142,541

— — —

— — —

(16,535 ) 9,530 12,975

— — —

— — —

(16,535 ) 9,530 12,975

— — —

— — — 8 — — — —

— — — — — — — —

— — — — — — — —

9,376 — (3,239 ) 689,953 — — 13,955 27,830

— — — (262 ) — (342 ) — —

9,376 (320 ) (3,239 ) 770,522 38,077 (342 ) 13,955 27,830

— — — — — — — —

— — — — — — — —

2,578,398 101,616 407,812

— — —

— — —

— — —

11,919 — 15,980

— — —

11,919 — 15,980

— — —

— — —

(13,282 ) 84,979,869 — — — —

— 8 — — — —

— — — — — —

— — — — — —

(345 ) 759,292 — — 25,619 24,906

— 118,900 49,557 — — —

(345 ) 877,596 49,557 (1,474 ) 25,619 24,906

— — — — — —

— — — — — —

1,523,952 (724,473 )

1

—

—

13,467 (14,774 )

—

13,468 (14,774 )

—

—

— 9

— —

(87,015 ) 85,692,333

$

$

— —

$

(2,779 ) 805,731

— — —

— (604 ) — (1,474 ) — — —

$

(See Notes to Consolidated Financial Statements)

47

— (320 ) — 80,823 38,077 — — —

— (2,078 )

$

— 168,457

$

(2,779 ) 972,119

(1,344,236 ) — —

18,415 — —

— —

(34,950 ) — — 16,535 — —

$

— —

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The Board of Directors and Stockholders of Grubhub Inc. Chicago, Illinois We have audited the accompanying consolidated balance sheets of Grubhub Inc. (the “Company”) as of December 31, 2016 and 2015, and the related consolidated statements of operations, comprehensive income, changes in stockholders’ equity and redeemable common stock, and cash flows for each of the three years in the period ended December 31, 2016. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Grubhub Inc. at December 31, 2016 and 2015, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2016, in conformity with accounting principles generally accepted in the United States of America. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Grubhub Inc.’s internal control over financial reporting as of December 31, 2016, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework) and our report dated February 28, 2017, expressed an unqualified opinion thereon. /s/ Crowe Horwath LLP Oak Brook, Illinois February 28, 2017

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