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Groupon (GRPN) Q3 Loss Wider Than Expected, Revenues Down Y/Y

Groupon GRPN 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.

Groupon, Inc. Price, Consensus and EPS Surprise

Groupon, Inc. Price, Consensus and EPS Surprise
Groupon, Inc. Price, Consensus and EPS Surprise

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

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%.

Zacks Rank & Stocks to Consider

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

Its shares have tumbled 69.6% against the Zacks Computer and Technology sector’s decline of 38.4% in the year-to-date period.

Here are some better-ranked stocks worth considering in the broader sector.

Tencent Music Entertainment Group TME has a Zacks Rank #2 (Buy) at present. The company is set to report third-quarter 2022 earnings on Nov 15. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

TME shares have lost 42.1% in the year-to-date period compared with the Zacks Internet - Content industry’s decline of 41.8%.

The Trade Desk TTD has a Zacks Rank #2 at present. The company is set to report third-quarter 2022 earnings on Nov 9.

TTD shares have lost 52.5% in the year-to-date period compared with the Zacks Internet - Services industry’s decline of 42.4%.

Agilent Technologies A has a Zacks Rank #2 at present. The company is set to report third-quarter 2022 earnings on Nov 21.

Agilent Technology shares have lost 13.5% in the year-to-date period compared with the Zacks Electronics - Testing Equipment industry’s decline of 21.6%.


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