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Groupon (GRPN) Q1 Loss Narrower than Expected, Revenues Miss
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Groupon Inc. (GRPN - Free Report) reported first-quarter 2017 loss of 2 cents (including stock-based compensation), which was narrower than the Zacks Consensus Estimate of a loss of a nickel. On a reported basis, loss was 4 cents per share, narrower than 8 cents in the year-ago quarter.
Revenues of $673.6 million missed the Zacks Consensus Estimate of $717.1 million and also declined 3.6% on a year-over-year basis.
We note that the stock plunged almost 14% in the last two-trading sessions following the results. Groupon has underperformed the broader Zacks Internet Commerce industry on a year-to-date basis. While the industry registered growth of 29.6%, the stock gained only 3.3%.
Revenue Details
Region-wise, North America revenues decreased 5.5% from the year-ago quarter while International revenues increased 1.3% year over year.
Gross billings dipped 0.9% year over year to $1.36 billion in the quarter. Region-wise, billings from North America jumped 2.9% year over year. However, international billings declined 9.1%.
North America local gross billings of $587.8 million grew 8.9%. Local revenues of $200.5 million grew 4.4% from the year-ago quarter. However, goods billings declined 10.7% and revenues fell 12.3% to $252.4 million.
During the quarter, Groupon reduced its country presence to 15. As of Mar 31, 2017, the company had approximately 48.3 million active customers globally. Groupon added nearly 500K new customers in North America during the quarter. Active customers in North America were 31.6 million at the end of the quarter.
Operating Details
Gross margin contracted 10 basis points (bps) on a year-over-year basis to 45.9% in the quarter. North America gross profit increased 2.3%, while internationally it declined 15%.
Adjusted EBITDA margin expanded 210 bps to 6.6%, reflecting successful implementations of the company’s streamlining initiatives.
Groupon’s operating expenses dropped 9% year over year to $318.39 as SG&A declined 11.8% and marketing expenses declined 1.1%.
Operating loss was $8.9 million compared with a loss of $30.2 million in the year-ago quarter.
Balance Sheet and Cash Flow
As of Mar 31, 2017, Groupon had cash & cash equivalents worth $691 million as compared with $891.8 million as of Dec 31, 2016.
Free cash outflow was $150.3 million as compared with free cash flow of $275.3 million at the end of the previous quarter.
During the first quarter, Groupon repurchased 7,336,681 shares of its common stock for an aggregate purchase price of $26 million.
Outlook
For second-quarter 2017, Groupon expects EBITDA to decline sequentially as the company plans to continue its investments in marketing and offline campaigning activities. However, EBITDA is expected to increase from the year-ago quarter figure of $36 million.
For 2017, Groupon projects gross profit to remain in the range of $1.30 billion to $1.35 billion, an increase of $40 - $90 million from full-year 2016 on an FX neutral basis.
Management also expects to generate revenues of around 2.9 billion for 2017.
Also, adjusted EBITDA is projected to remain in the range of $200-$240 million (for the 11 countries), reflecting an increase of $16 - $56 million over 2016 levels on an FX neutral basis.
Our Take
Groupon is disposing of its international operations massively with the idea of shifting focus on local business from goods. This might impact stability and growth of its international operations.
Since the company is thinking of investing in marketing activities, customer acquisition rate might increase.
Although softness in the business was observed during the run up to the elections and a few weeks after it, the company is again back on a strong footing. This indicates growing demand for the company’s platform, which augurs well for the long run.
However, competition from giants like eBay (EBAY - Free Report) and Amazon.com (AMZN - Free Report) is a significant headwind that investors need to watch out for.
Notably, the long-term growth rate for TrueCar is 100%.
More Stock News: 8 Companies Verge on Apple-Like Run
Did you miss Apple's 9X stock explosion after they launched their iPhone in 2007? Now 2017 looks to be a pivotal year to get in on another emerging technology expected to rock the market. Demand could soar from almost nothing to $42 billion by 2025. Reports suggest it could save 10 million lives per decade which could in turn save $200 billion in U.S. healthcare costs. A bonus Zacks Special Report names this breakthrough and the 8 best stocks to exploit it. Like Apple in 2007, these companies are already strong and coiling for potential mega-gains. Click to see them right now >>
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Groupon (GRPN) Q1 Loss Narrower than Expected, Revenues Miss
Groupon Inc. (GRPN - Free Report) reported first-quarter 2017 loss of 2 cents (including stock-based compensation), which was narrower than the Zacks Consensus Estimate of a loss of a nickel. On a reported basis, loss was 4 cents per share, narrower than 8 cents in the year-ago quarter.
Revenues of $673.6 million missed the Zacks Consensus Estimate of $717.1 million and also declined 3.6% on a year-over-year basis.
We note that the stock plunged almost 14% in the last two-trading sessions following the results. Groupon has underperformed the broader Zacks Internet Commerce industry on a year-to-date basis. While the industry registered growth of 29.6%, the stock gained only 3.3%.
Revenue Details
Region-wise, North America revenues decreased 5.5% from the year-ago quarter while International revenues increased 1.3% year over year.
Gross billings dipped 0.9% year over year to $1.36 billion in the quarter. Region-wise, billings from North America jumped 2.9% year over year. However, international billings declined 9.1%.
Groupon, Inc. Price, Consensus and EPS Surprise
Groupon, Inc. Price, Consensus and EPS Surprise | Groupon, Inc. Quote
North America local gross billings of $587.8 million grew 8.9%. Local revenues of $200.5 million grew 4.4% from the year-ago quarter. However, goods billings declined 10.7% and revenues fell 12.3% to $252.4 million.
During the quarter, Groupon reduced its country presence to 15. As of Mar 31, 2017, the company had approximately 48.3 million active customers globally. Groupon added nearly 500K new customers in North America during the quarter. Active customers in North America were 31.6 million at the end of the quarter.
Operating Details
Gross margin contracted 10 basis points (bps) on a year-over-year basis to 45.9% in the quarter. North America gross profit increased 2.3%, while internationally it declined 15%.
Adjusted EBITDA margin expanded 210 bps to 6.6%, reflecting successful implementations of the company’s streamlining initiatives.
Groupon’s operating expenses dropped 9% year over year to $318.39 as SG&A declined 11.8% and marketing expenses declined 1.1%.
Operating loss was $8.9 million compared with a loss of $30.2 million in the year-ago quarter.
Balance Sheet and Cash Flow
As of Mar 31, 2017, Groupon had cash & cash equivalents worth $691 million as compared with $891.8 million as of Dec 31, 2016.
Free cash outflow was $150.3 million as compared with free cash flow of $275.3 million at the end of the previous quarter.
During the first quarter, Groupon repurchased 7,336,681 shares of its common stock for an aggregate purchase price of $26 million.
Outlook
For second-quarter 2017, Groupon expects EBITDA to decline sequentially as the company plans to continue its investments in marketing and offline campaigning activities. However, EBITDA is expected to increase from the year-ago quarter figure of $36 million.
For 2017, Groupon projects gross profit to remain in the range of $1.30 billion to $1.35 billion, an increase of $40 - $90 million from full-year 2016 on an FX neutral basis.
Management also expects to generate revenues of around 2.9 billion for 2017.
Also, adjusted EBITDA is projected to remain in the range of $200-$240 million (for the 11 countries), reflecting an increase of $16 - $56 million over 2016 levels on an FX neutral basis.
Our Take
Groupon is disposing of its international operations massively with the idea of shifting focus on local business from goods. This might impact stability and growth of its international operations.
Since the company is thinking of investing in marketing activities, customer acquisition rate might increase.
Although softness in the business was observed during the run up to the elections and a few weeks after it, the company is again back on a strong footing. This indicates growing demand for the company’s platform, which augurs well for the long run.
However, competition from giants like eBay (EBAY - Free Report) and Amazon.com (AMZN - Free Report) is a significant headwind that investors need to watch out for.
Zacks Rank & Key Pick
At present, Groupon has a Zacks Rank #3 (Hold).
A better-ranked stock in the broader technology space is TrueCar (TRUE - Free Report) , carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Notably, the long-term growth rate for TrueCar is 100%.
More Stock News: 8 Companies Verge on Apple-Like Run
Did you miss Apple's 9X stock explosion after they launched their iPhone in 2007? Now 2017 looks to be a pivotal year to get in on another emerging technology expected to rock the market. Demand could soar from almost nothing to $42 billion by 2025. Reports suggest it could save 10 million lives per decade which could in turn save $200 billion in U.S. healthcare costs. A bonus Zacks Special Report names this breakthrough and the 8 best stocks to exploit it. Like Apple in 2007, these companies are already strong and coiling for potential mega-gains. Click to see them right now >>