GrubHub Plans $100 Million IPO

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As expected, GrubHub Inc filed for an initial public offering to sell up to $100 million in stock in order to finance its growth.

Strong recent growth

The recent growth at GrubHub has been strong.  According to GrubHub’s S-1 filing, the firm, formerly known as GrubHub Seemless, had a 67% increase in revenue from 2012, generating $137 million on over 135,000 orders, or approximately $1.3 billion in food sales.

A profitable tech startup

Perhaps more significant, the internet tech start up showed a profit, with net income of $6.7 million. The company connects diners to over 28,000 restaurants in 600 cities across the US primarily through the Internet, and 43% of customers use their mobile application to order food.  The service is free to consumers but it takes a small percentage surcharge from the restaurant.

Correct market environment?

With Facebook Inc (NASDAQ:FB) paying a record $16 billion to acquire WhatsApp, a deal announced last week, the market environment may be right for additional tech IPOs, or at least that’s what GrubHub Inc., may be hoping.

Chicago-based GrubHub has engaged in a flurry of pre-IPO activity lately.  Last year GrubHub and New York-based Seamless merged, which was followed by T. Rowe Price Group Inc (NASDAQ:TROW) taking a stake in the combined firm.  In late January GrubHub and Foresquare announced they were launching a joint project.  As reported in ValueWalk, under the agreement, users can search for a restaurant through the Foursquare application and the GPS application inside the mobile phone will serve up participating restaurants.

The early stage investors include Spectrum Equity, Aramark’s private-equity fund, Origin Ventures, Benchmark Capital and DAG Ventures. GrubHub expects to be listed on the New York Stock Exchange under the ticker GRUB.

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