By Sai Sachin R and Anya George Tharakan
(Reuters) - GrubHub Inc (N:GRUB), an online food order and delivery company, reported third-quarter profit and revenue below market expectations, hurt by higher costs and service disruptions.
GrubHub's shares plunged as much as 30 percent to a record low in morning trading on Tuesday after the company also forecast fourth-quarter revenue that missed analysts' estimates.
The company faced service outages in the quarter as it moved to a new technology platform, Chief Financial Officer Adam DeWitt said on an analyst call.
He also blamed "dry weather" for being a drag on revenue. GrubHub typically sees a surge in orders during colder weather.
The company, which provides services in more than 900 U.S. cities, delivers everything from expensive steaks to bento boxes and gets paid a commission by restaurants for orders placed through its website or app.
The company, which only took meal orders previously, has now been investing heavily in its food delivery business.
The increase in spending, which Chief Executive Matt Maloney termed as "greater than anticipated", reflected in GrubHub's total costs. Expenses jumped 47.2 percent to $74 million in the third quarter ended Sept. 30, outpacing revenue growth of 38.2 percent.
"It's getting harder and harder (for GrubHub) to extract more value on a per-restaurant basis, and some markets are reaching greater points of saturation," said James Cakmak, an analyst at Monness, Crespi, Hardt & Co.
Chicago-based GrubHub, which went public in April 2014, has benefited as more people order food online. But this has also spurred new competition from non-traditional players.
Last month, e-commerce giant Amazon.com Inc (O:AMZN) said it would offer its own restaurant delivery service to its Prime members in Seattle. Ridesharing service Uber [UBER.UL] has also expanded its meal delivery service in some cities.
Revenue rose to $85.7 million from $61.9 million in the quarter, as the as the number of active diners using its online services to order food rose 41 percent to 6.43 million.
Net income rose 6.4 percent to $6.9 million, or 8 cents per share. On an adjusted basis, GrubHub earned 13 cents per share.
Analysts on average had expected profit of 14 cents per share and revenue of $86.5 million, according to Thomson Reuters I/B/E/S.
GrubHub forecast revenue of $98-$100 million for the current quarter. Analysts were expecting $100.9 million.
The company's shares were down 21 percent at $25.34 in midday trading on Tuesday. They fell to a low of $22.49.