(Reuters) - GrubHub Inc (GRUB.N) reported a quarterly profit that missed analysts’ estimates as its efforts to attract more people to its food order and delivery services drove up marketing costs.
On an adjusted basis, the company earned 23 cents per share, missing the average analysts’ estimate of 25 cents per share, according to Thomson Reuters I/B/E/S.
“We think GRUB is priced to beat and raise, not sure they delivered today,” Jefferies analyst David Reynolds wrote in a note.
The company’s net income rose to $13.6 million, or 16 cents per share, in the fourth quarter ended Dec. 31, from $11.3 million, or 13 cents per share, a year earlier.
“We are getting better at marketing in general,” Chief Financial Officer Adam DeWitt told Reuters in an interview, and said the company “feels good” about spending money on the marketing side.
GrubHub’s quarterly sales and marketing expenses rose 19 percent to $29.6 million.
The company, whose network covers over 1,100 U.S. cities, also forecast revenue of $620 million-$660 million for the full year, slightly lower than estimates of $619.5 million.
The Chicago-based company gave a wider-than-usual range for full-year guidance allowing it to “flex up and flex down” on marketing spend and some other investments to drive additional growth, DeWitt said.
The company forecast full year adjusted earnings before interest, tax, depreciation and amortization (EBITDA) of $165 million-$190 million, the midpoint of which was below Mizuho Securities USA’s estimate of $184 million.
GrubHub appears to continue to invest heavily in delivery, especially this year, as the company’s EBITDA forecast came in below expectations, Mizuho analyst Neil Doshi said.
GrubHub’s revenue rose 37.5 percent to $137.5 million, narrowly beating estimates.
The company, which allows diners to order from more than 45,000 restaurants, said the number of active diners rose 21.2 percent to 8.2 million. Analysts were expecting 7.99 million active diners, according to market research firm FactSet StreetAccount.
Reporting by Aishwarya Venugopal in Bengaluru; Editing by Shounak Dasgupta