It has been about a month since the last earnings report for Groupon (GRPN - Free Report) . Shares have added about 100.9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Groupon due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Groupon Beats on Q2 Earnings and Revenues
Groupon reported second-quarter 2020 non-GAAP loss of 93 cents per share, narrower than the Zacks Consensus Estimate of a loss of $2.63. Notably, the company had reported earnings of 24 cents reported in the prior-year quarter.
Revenues of $396 million beat the Zacks Consensus Estimate by 115.2%. The figure however declined 26% on a year-over-year basis (down 25% excluding foreign exchange effect).
Region-wise, North America revenues decreased 28.1% from the year-ago quarter to $233.3 million. International revenues fell 21.9% (down 20% excluding foreign exchange effect) year over year to $162.2 million.
Service revenues (28.4% of revenues) were down 59.5% year over year to $112.38 million. However, Product revenues (71.5% of revenues) increased 11.1% to $283.2 million.
Local revenues of $99.7 million declined 59.6% from the year-ago quarter. North America Local revenues decreased 53.8% and International Local revenues fell 73.6%, excluding foreign exchange effect.
Goods revenues increased 11.9% year over year to $292.4 million. North America Goods revenues increased 13.4%. International Goods revenues increased 13.1%, excluding foreign exchange effect.
Travel revenues fell 85.6% year over year to $3.48 million. North America Travel revenues plunged 84.3%. International Travel revenues declined 88.5%, excluding foreign exchange effect.
In the second quarter, gross billings were $582.7 million, down 47.5%, excluding foreign exchange effect.
North America billings were $352.5 million, down 52.1% year over year. International billings were $230.2 million, down 38.8% excluding foreign exchange effect.
North America Local and Travel gross billings declined 66.8% and 86.3%, respectively while Goods gross billings increased 17.8% on a year-over-year basis.
International Local and Travel gross billings declined 68.9% and 79.6%, respectively while Goods gross billings increased 18% on a year-over-year basis, excluding foreign exchange effect.
Global units sold during the reported quarter declined 35% year over year to 23 million, primarily owing to the coronavirus crisis-induced negative impact on demand. North America units were down 64% in Local but up 31% in Goods. International units were down 72% in Local but up 44% in Goods.
As of Jun 30, 2020, Groupon had approximately 15.3 million active customers internationally compared with 16.5 million at the end of the previous quarter.
Moreover, as of Jun 30, 2020, the company had approximately 22.8 million active customers based in North America compared with 25.3 million at the end of the prior quarter.
Gross profit in the second quarter came in at $137.2 million, down 53% (down 53%, excluding foreign exchange effect) year over year.
International gross profit decreased 61% year over year, excluding foreign exchange effect, to $35.5 million. Coronavirus crisis had a negative impact on demand.
International Local and Travel gross profit decreased 77% and 89%, respectively while Goods gross profit remained flat on a year-over-year basis, excluding foreign exchange effect.
Moreover, North America’s gross profit fell 49% to $101.7 million, primarily due to the impacts of coronavirus on volume. North America Local and Travel gross profit decreased 55% and 85%, respectively while Goods gross profit remained flat on a year-over-year basis.
Adjusted EBITDA came in at $1.3 million compared with adjusted EBITDA of $46.5 million reported in the prior-year quarter.
Selling, general and administrative (SG&A) expenses decreased 31.7% year over year to $143.6 million in the reported quarter.
Marketing expenses declined 71.6% to $25.2 million, primarily owing to lower offline marketing investments and accelerated traffic declines.
The company incurred operating loss of $72.1 million compared with operating loss of $7.1 million in the prior-year quarter.
Groupon exited the quarter ending Jun 30, 2020, with cash and cash equivalents of $784.6 million, up from $666.9 million, as of Mar 31, 2020.
As of Jun 30, 2020, the company had $200 million of outstanding borrowings under revolving credit facility.
For third-quarter 2020, Groupon projects adjusted EBITDA loss of $10 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month. The consensus estimate has shifted 25.91% due to these changes.
At this time, Groupon has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions looks promising. Notably, Groupon has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.