October 23, 2014 / 1:10 PM / in 3 years

GrubHub revenue jumps as more customers order food online

(Reuters) - GrubHub Inc reported a more than five-fold jump in quarterly profit as more consumers used the online food-order-and-delivery company to order meals.

GrubHub CEO Matt Maloney (2nd R) takes a "selfie" photograph before ringing the opening bell, before the company's IPO on the floor of the New York Stock Exchange in New York April 4, 2014. REUTERS/Lucas Jackson

The company’s shares rose as much as 6 percent to $39.50 in early trading on Thursday.

GrubHub, which delivers everything from expensive steaks to bento boxes, receives a commission from restaurants on orders booked through its website and mobile application.

Online food delivery companies have been benefiting as more people use smartphones and other devices to order online.

GrubHub said its number of active diners grew 50 percent to 4.6 million from a year earlier.

“...growth in active diners remained strong even as we reduced overall advertising spend sequentially in the seasonally slow third quarter,” co-founder and Chief Executive Matt Maloney said in a statement on Thursday.

The company forecast current-quarter revenue of $68.5 million to $70.5 million, beating the analysts’ average estimate of $66.7 million, according to Thomson Reuters I/B/E/S.

“We look forward to what should be a seasonally strong fourth quarter with increased activity and the ability to spend more on advertising efficiently,” Maloney said.

The September quarter is seasonally soft for the company as diners use the service less during the summer months. Orders increase as students go back to school and the weather turns colder.

Chicago-based GrubHub merged with rival Seamless in August to boost its presence on the U.S. East Coast. Seamless, popular with large businesses, was started in 1999 by two lawyers to deliver food for employees working long hours.

The company now operates in more than 700 cities in the United States, helping customers order from about 30,000 takeout restaurants.

GrubHub’s net income rose to $6.5 million, or 8 cents per share, in the third quarter ended Sept. 30, from $1.2 million, or 1 cent per share, a year earlier.

Revenue rose 51 percent to $61.9 million.

Analysts on average were expecting an adjusted profit of 6 cents per share on revenue of $57.4 million, according to Thomson Reuters I/B/E/S.

Reporting by Abhirup Roy in Bangalore; Editing by Simon Jennings

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