It has been about a month since the last earnings report for Groupon (GRPN Quick QuoteGRPN - Free Report) . Shares have lost about 14.6% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Groupon due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Groupon Q3 Loss Wider Than Expected, Revenues Down Y/Y

Groupon reported a third-quarter 2022 non-GAAP loss of 68 cents per share, which was wider than the Zacks Consensus Estimate of a loss of 56 cents.

The company had reported non-GAAP earnings of 38 cents per share in the year-ago quarter.

Revenues of $144.39 million missed the Zacks Consensus Estimate by 17.30%. The figure declined 33% on a year-over-year basis (down 30% excluding the foreign exchange effect).

Region-wise, North America revenues slumped 25% year over year to $107.9 million. International revenues fell 49% (down 41% excluding the foreign exchange effect) to $36.5 million.

Quarterly Details

Service revenues were down 27.4% year over year to $144.39 million.

Local revenues of $127.9 million declined 27% year over year (down 24% excluding the foreign exchange effect). North America Local revenues decreased 24% while International Local revenues fell 35% year over year.

Consolidated Travel revenues decreased 30.8% year over year to $6.02 million. North America Travel revenues declined 10.2% year over year.

International Travel revenues decreased 50% in the reported quarter.

On a consolidated basis, Goods revenues declined 65.5% year over year to $10.437 million. North America Goods revenues declined 34.9% while International Goods revenues fell 78.8%, excluding the foreign exchange effect, on a year-over-year basis.

Customer Metrics

At the end of the third quarter, Groupon had approximately 20.2 million active customers compared with 24 million at the end of the previous quarter.

At the end of the third quarter, the company had approximately 12.3 million active customers based in North America and 7.9 million active international customers.

Operating Details

In the third quarter, gross profit came in at $125.7 million, down 33% year over year.

Selling, general and administrative expenses fell 0.2% year over year to $119.2 million in the reported quarter. Marketing expenses decreased 28.8% to $37.9million.

The company reported an operating loss of $36.33 million compared with a loss of $3.697 million in the year-ago quarter.

Balance Sheet & Cash Flow

Groupon exited the quarter with cash and cash equivalents of $307.99 million, down from $315.6 million as of Jun 30, 2022.

In the third quarter, the company used $43.5 million of operating cash flow against $30.2 million generated in the prior quarter.

Groupon reported a free cash outflow of $51.840 million compared with $39.3 million of free cash flow reported in the previous quarter.

Guidance

Groupon has withdrawn its previously issued full-year 2022 revenue and adjusted EBITDA guidance, given its turnaround strategy and uncertain macroeconomic environment.

For full-year 2023, Groupon expects a free cash flow of $100 million and an adjusted EBITDA margin of 15-20%.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.

VGM Scores

Currently, Groupon has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Groupon has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Groupon is part of the Zacks Internet - Commerce industry. Over the past month, eBay (EBAY Quick QuoteEBAY - Free Report) , a stock from the same industry, has gained 4.2%. The company reported its results for the quarter ended September 2022 more than a month ago.

eBay reported revenues of $2.38 billion in the last reported quarter, representing a year-over-year change of -4.8%. EPS of $1 for the same period compares with $0.90 a year ago.

eBay is expected to post earnings of $1.06 per share for the current quarter, representing a year-over-year change of +1%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.2%.

eBay has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.