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Groupon (GRPN) Q2 Earnings Top Estimates, Revenues Decline Y/Y

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Groupon, Inc. (GRPN - Free Report) reported second-quarter 2021 non-GAAP earnings of 33 cents per share, versus the Zacks Consensus Estimate of a loss of 34 cents. The company had reported non-GAAP loss per share of 93 cents in the prior-year quarter.

Revenues of $265.9 million beat the Zacks Consensus Estimate by 8.5%. However, the figure declined 32.8% on a year-over-year basis (down 35.2% excluding foreign exchange effect).

Region-wise, North America revenues plunged 31.1% from the year-ago quarter’s level to $160.7 million. International revenues fell 35.2% (down 41.2% excluding foreign exchange effect) year over year to $105.1 million.

Nonetheless, Groupon’s ongoing restructuring efforts as well as its pivot strategy look promising. Through its pivot strategy, Groupon is expanding inventory to boost billings growth as well as improve purchase frequency and modernize marketplace.

Groupon, Inc. Price, Consensus and EPS Surprise

 

Groupon, Inc. Price, Consensus and EPS Surprise

Groupon, Inc. price-consensus-eps-surprise-chart | Groupon, Inc. Quote

 

Quarterly Details

Service revenues (77.5% of revenues) were up 83.5% year over year to $206.1 million. Product revenues (22.5% of revenues) deteriorated 78.9% to $59.8 million.

Consolidated local revenues of $180.1 million surged 80.6% from the year-ago quarter’s levels. North America Local revenues increased 71.1% and International Local revenues increased 102.3%, excluding foreign exchange effect.

Consolidated Travel revenues increased 233.5% year over year to $11.6 million. North America Travel revenues surged 222.5%. International Travel revenues increased 228.7%, excluding foreign exchange effect.

On a consolidated basis, Goods revenues declined 74.6% year over year to $74.1 million. North America Goods revenues declined 91.4%. International Goods revenues declined 61%, excluding foreign exchange effect.

In the second quarter, consolidated gross billings were $607.5 million, up 1.5%, excluding foreign exchange effect.

North America gross billings were $433 million, up 22.9% year over year. International billings were $174.5 million, down 31.3% excluding foreign exchange effect.

North America Local and Travel gross billings increased 101.4% and 240.4%, respectively. Goods gross billings declined 67.4% on a year-over-year basis.

International Local and Travel gross billings increased 31.2% and 70.1%, respectively. Goods gross billings declined 61.1% on a year-over-year basis, excluding foreign exchange effect.

Owing to the coronavirus crisis-induced negative impact on demand, consolidated units sold during the reported quarter fell 27.6% year over year to 16.7 million.

Region wise, North America units were down 12%, while International units were down 47.6% year over year.

Customer Metrics

As of Jun 30, 2021, Groupon had approximately 24.9 million active customers internationally compared with 25.8 million at the end of the previous quarter.

As of Jun 30, 2021, the company had approximately 15.2 million active customers based in North America and 9.7 million active international customers.

Operating Details

In the second quarter, gross profit came in at $193.9 million, up 41.3% (up 37.7%, excluding foreign exchange effect) year over year.

International gross profit increased 45.6% year over year and 31.7% excluding foreign exchange effect to $51.7 million. Under the International segment, excluding foreign exchange effect, Local and Travel categories reported gross profit increase of 157.3% and 292.3%, respectively. Goods category gross profit plunged 47.7% year over year.

Coming to North America region, gross profit increased 39.8% to $142.2 million. Local and Travel categories reported gross profit increased of 74.2% and 249.8%, respectively. Goods gross profit fell 61.8%.

Non-GAAP adjusted EBITDA came in at $40.9 million compared with adjusted EBITDA of $1.3 million reported in the prior-year quarter.

Selling, general and administrative (SG&A) expenses fell 3.9% year over year to $137.9 million in the reported quarter. Marketing expenses surged 73.2% year over year to $43.7 million.

The company reported operating loss of $1.9 million compared with operating loss of $72.1 million in the prior-year quarter.

Balance Sheet & Cash Flow

Groupon exited the quarter ending Jun 30, 2021, with cash and cash equivalents of $565 million, down from $676.8 million, as of Mar 31, 2021.

In the second quarter, the company used $34.3 million of operating cash flow compared with $46.4 million used in the prior quarter.

Free cash out flow came was $46.7 million compared with $58.4 million of free cash outflow reported in the previous quarter.

Guidance

For 2021, Groupon expects revenues in the range of $950-$990 million. Adjusted EBITDA is projected between $115 million and $125 million compared with earlier guidance of $110-$120 million.

Zacks Rank & Stocks to Consider

Groupon currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader retail-wholesale worth consideration are ACV Auctions Inc. (ACVA - Free Report) , The Wendys Company (WEN - Free Report) and Target Corporation (TGT - Free Report) . All the stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

ACV Auctions and The Wendys Company are scheduled to report quarterly results on Aug 11, while Target Corporation is slated to announce results on Aug 18.


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