GrubHub (Buy, $49 PO) Stock view: Marketing ramp should drive diner growth re-acceleration In recent quarters, GrubHub has been leveraging a series of recent investments, including expanded delivery, more restaurants on the platform, repositioned brand driving more effective advertising, and product optimization, which is driving higher conversion rates. We think GrubHub is well-positioned to continue to leverage these investments to drive growth in 2017 and beyond. GrubHub’s delivery business is reaching scale in more markets, and delivered gross food sales run-rate increased from $500mn in 3Q to nearly S600mn in 4Q (20% of ’16 food sales). Delivered orders were 40% higher than in 3Q. We think delivery will continue to drive take rate higher and be EBITDA accretive by YE17 as efficiencies are gained. Competition remains a key concern for investors and weighs on sentiment. However, we believe that GrubHub’s user base is sticky and its repeat order rate (>90%) is defensible. In 2016, as UberEats, Amazon Prime Now, DoorDash, and Postmates invested in expansion, GrubHub’s active diner growth and order growth remained solid. Google Trends indicates that over the past 12 months, though competitors have expanded to more cities in the US, GRUB remains the overwhelming leader in the market, with both of its core brands (GrubHub and Seamless) many times the size of any of its competitors. GrubHub 1Q results may also face a modest growth headwind from warmer weather in key markets like NYC and Chicago. For context, in 4Q15, GrubHub called out warmer weather was a 200bps y/y order growth drag (~$2mn in revenue, $12.7mn in gross food sales). Warmer weather can impact order volume and new diner growth, though new diners can partially shift to 2Q. We forecast 26% y/y gross food sales and 36% y/y revenue growth in 1Q’17. We think active diner growth will accelerate in 2017 as the company invests more heavily in marketing and it comps out against its “quality o