Investors piled into Grubhub (NYSE: GRUB) on Wednesday, driving shares of the online food delivery company up nearly 25% to close on a market cap of some $12.3 billion, over Tuesday’s close of $9.8 billion.
Grubhub reported quarterly revenues that jumped to $239.7 million, representing a 51% YoY increase, with EBITDA hitting $67.4 million—a 61% YoY gain. The Chicago-based company’s performance was spurred along by a big jump in the number of diners who use its food delivery platform, up to 15.6 million, a 70% YoY improvement. That led to food sales hitting $1.2 billion, a 39% YoY uptick.
But that’s only part of the story.
In addition to crushing its latest earnings report, Grubhub has agreed to buy LevelUp, a Boston-based company that provides a mobile engagement platform geared toward restaurants and their customers, for $390 million in cash. That’s up from the $287 million valuation LevelUp reached with a private funding round last year. The acquisition would become, upon completion, Grubhub’s 10th since the start of 2007, per the PitchBook Platform, and its largest over that period. Last year, Grubhub picked up rival Eat24 for $287.5 million from Yelp as part of a five-year partnership designed to consolidate their respective assets.
The rationale behind the purchase of LevelUp is simplification. Grubhub plans to deploy LevelUp’s tech to drive online delivery and pickup orders. In addition to making it easier for major chains like KFC, Taco Bell and Bareburger to stitch into the Grubhub marketplace, LevelUp’s platform will integrate into Grubhub’s existing point-of-sale capabilities and provide restaurants with analytical tools.
And as with any company in the food delivery space, Grubhub and its partners will benefit from greater scale and sharper operating focus in an increasingly crowded foodtech space. Last year alone, venture capital investors poured some $3.4 billion across 209 completed deals into startups that specialize in everything from meal kit deliveries to restaurant reviews, per PitchBook data.
LevelUp, for its part, has raised around $115 million from a wide variety of investors including JPMorgan Chase, Highland Capital Partners and GV.
The startup’s valuation has increased with each financing round since it was founded in 2008. Here’s a look at how LevelUp (which evolved out of a mobile gaming company called SCVNGR) steadily leveled up in both fundraising and valuation since raising a modest Series A of less than $1 million a decade ago:
• 2009: $4 million funding | $13.1 million valuation
• 2011: $17 million | $102.7 million
• 2012: $20 million | $178 million
• 2013: $8.7 million | $186.8 million
• 2015: $14.2 million | $249.9 million
• 2017: $50 million | $286.7 million
LevelUp has enlisted the legal help of Foley Hoag on the acquisition, while Kirkland & Ellis is serving as legal counsel to Grubhub.
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