(Reuters) - Online food delivery company GrubHub Inc’s (GRUB.N) disappointing profit forecast overshadowed an all-round third-quarter beat, sending the stock tumbling 9 percent on Thursday morning.
GrubHub said it expects fourth-quarter adjusted earnings before interest, taxation, depreciation and amortization (EBITDA) to be in the range of $40 million to $50 million, much lower than the $72.6 million analysts were expecting, according to Refinitiv data.
GrubHub’s Chief Financial Officer Adam DeWitt said the company will spend $20 million to $30 million more on marketing and delivery expansion in the fourth quarter.
“I think the EBITDA guidance was disappointing. They mentioned they will be spending a lot more on adding diners, which I’m thinking is due to the increased competition from Uber Eats,” Morningstar analyst Ali Moghrabi said.
GrubHub is under heavy pressure from rivals Amazon Restaurants and Uber Eats, owned by their deep-pocketed parent companies Amazon.com Inc (AMZN.O) and Uber [UBER.UL], that are expanding rapidly.
Recent media reports detailing Uber Eats’ plans to expand its delivery service to reach 70 percent of the U.S. market had already hit GrubHub’s shares on Wednesday, ending the session down over 5 percent.
“It may be a little bit optimistic but Uber Eats will certainly take some market share from GrubHub,” Moghrabi said.
GrubHub has been heavily focused on acquisitions and recently bought campus food ordering platform Tapingo and closed its purchase of mobile ordering and payments platform LevelUp.
GrubHub’s net income attributable to common stockholders rose to $22.7 million, or 24 cents per share, in the third quarter ended Sept. 30, from $13 million, or 15 cents per share, a year earlier.
Excluding items, it reported profit of 45 cents per share, beating analysts’ estimate of 41 cents per share, according to Refinitiv data.
Revenue rose 51.6 percent to $247 million, beating analysts’ estimate of $238.9 million. Fourth-quarter revenue forecast of $283 million to $293 million was also higher than analysts’ expectations.
The Chicago-based company said active diners - a closely watched metric that measures the number of unique accounts from which an order has been placed, rose 67.3 percent to 16.4 million in the quarter, slightly above analysts’ estimates of 16.26 million, according to research firm Factset.
Reporting by Shariq Khan in Bengaluru; Editing by Supriya Kurane