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What’s GrubHub Cooking Up?

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LevelUp deal closes

GrubHub (GRUB) has recently closed on a deal to acquire mobile ordering and payment platform LevelUp. The transaction was valued at $390 million, and GrubHub paid for it using cash on hand supplemented by cash available under an existing credit facility. GrubHub’s cash holdings at the end of the second quarter stood at $442.7 million.

GrubHub says LevelUp will allow it to provide its restaurant partners with the industry’s most comprehensive ordering and delivery solutions. It also expects LevelUp to strengthen its point-of-sale integration capabilities.

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GrubHub chases $15.5 billion revenue opportunity

GrubHub is in the race with Square (SQ), Uber, and other providers for the billions of dollars in the food ordering and delivery market. Square runs a meal delivery service called Caviar. It also offers point-of-sale solutions for restaurants.

In the United States alone, the restaurant meal delivery market is expected to nearly double to $15.5 billion by 2022 from $8.5 billion in 2017, according to Pentallect. Last year, GrubHub acquired delivery service Eat24 from Yelp (YELP) to strengthen its position in the online food ordering and delivery market.

$2.0 million top line revenue from LevelUp

GrubHub expects LevelUp to boost its top line by ~$2.0 million in the third quarter. The company generated revenue of $240 million in the second quarter, representing a rise of 51% YoY (year-over-year). It turned a net profit of $30.1 million in the quarter, up more than 100% from a year ago.

Revenue rose 47.8% YoY at Square and 12% YoY at Yelp in the second quarter. PayPal (PYPL) and Amazon (AMZN) grew their revenues 23% and 39.3% YoY, respectively, in the second quarter.

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