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Groupon's (GRPN) Q1 Earnings and Revenues Miss Estimates

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Groupon GRPN reported first-quarter 2022 non-GAAP loss of 80 cents per share, which was wider than the Zacks Consensus Estimate of a loss of 46 cents. The company had reported non-GAAP earnings per share of 25 cents in the prior-year quarter.

Revenues of $153.3 million missed the Zacks Consensus Estimate by 7.54%. The figure declined 42% on a year-over-year basis (down 41% excluding foreign exchange effect).

Region-wise, North America revenues plunged 25% from the year-ago quarter’s level to $110.2 million. International revenues fell 63% (down 61% excluding foreign exchange effect) year over year to $43.2 million.

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

Quarterly Details

Service revenues (100% of revenues) were down 11.2% year over year to $153 million. The company did not generate Product revenues in the reported quarter compared with $91.2 million reported in the year-ago period.

Consolidated local revenues of $130.07 million declined 12.4% from the year-ago quarter’s level. Excluding the foreign exchange effect, North America Local revenues decreased 22.7% while International Local revenues increased 51.2%, year over year.

Consolidated Travel revenues increased 20.1% year over year to $8.17 million. North America Travel revenues declined 16.9% year over year. International Travel revenues reached $3.2 million in the reported quarter.

On a consolidated basis, Goods revenues declined 86.1% year over year to $15.07 million. North America Goods revenues declined 47.9% while International Goods revenues plunged 92.1%, excluding foreign exchange effect, on a year-over-year basis.

In the first quarter, consolidated gross billings were $460.6 million, down 15.2%, excluding the foreign exchange effect.

North America gross billings were $309.9 million, down 19% year over year. International billings were $150.7 million, down 6.6% excluding the foreign exchange effect.

North America Local, Travel and Goods gross billings decreased 11.4%, 23.7% and 47.5%, on a year-over-year basis, respectively.

International Local gross billings rose 51.1% while Goods gross billings declined 61.4% on a year-over-year basis, excluding the foreign exchange effect.

Owing to the coronavirus crisis-induced negative impact on demand, consolidated units sold during the reported quarter fell 28.9% year over year to 12.66 million.

Region-wise, North America units were down 32.8%, while International units were down 21.6% year over year

Customer Metrics

As of Mar 31, 2022, Groupon had approximately 22.2 million active customers compared with 23.3 million at the end of the previous quarter.

As of Mar 31, 2022, the company had approximately 14 million active customers based in North America and 8.2 million active international customers.

Operating Details

In the first quarter, gross profit came in at $134 million, down 19.8% (down 18.4%, excluding foreign exchange effect) year over year.

Coming to the North America region, gross profit decreased 27.7% to $94.2 million. Local, Travel and Goods categories reported a gross profit decrease of 11.4%, 23.7% and 47.5%, on a year-over-year basis, respectively.

International gross profit increased 8.6% year over year and 15.2% excluding the foreign exchange effect to $39.7 million. Under the International segment, excluding the foreign exchange effect, the Local category reported a gross profit increase of 50.9%. Goods category gross profit plunged 52.7% year over year.

Non-GAAP adjusted EBITDA was negative $7 million against an adjusted EBITDA of $30.4 million reported in the prior-year quarter.

Selling, general and administrative (SG&A) expenses fell 0.6% year over year to $126.4 million in the reported quarter. Marketing expenses increased 17.1% year over year to $39.4 million.

The company reported an operating loss of $34.3 million against an operating income of $14.4 million in the prior-year quarter.

Balance Sheet & Cash Flow

Groupon exited the quarter ending Mar 31, 2022, with cash and cash equivalents of $403 million, down from $498.7 million as of Dec 31, 2021.

In the first quarter, the company used $78.1 million of operating cash flow compared with $31 million generated in the prior quarter.

The company reported a free cash outflow of $91.1 million compared to $19.2 million of free cash flow reported in the previous quarter.

Guidance

For the second quarter of 2022, Groupon expects to deliver $155 million to $165 million of revenues and $0 million to $10 million of adjusted EBITDA.

For the full year 2022, Groupon expects to deliver $670 million to $700 million of revenues and $60 million to $80 million of adjusted EBITDA.

Zacks Rank & Stocks to Consider

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

Groupon’s shares have tumbled 32.4% compared with the Zacks Retail and Wholesale sector’s fall of 31.2% in the year-to-date period.

ACV Auctions ACVA, Arcos Dorados ARCO and Performance Food Group PFGC are some of the better-ranked stocks that investors can consider in the broader sector, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

ACV Auctions’ shares have underperformed the Zacks Retail and Wholesale sector in the year-to-date period. ACV Auction has returned 32.8%.

ACV Auction is expected to report first-quarter 2022 results on May 11.

Arcos Dorados’ shares have outperformed the Zacks Retail and Wholesale sector in the year-to-date period. The stock has rallied 28%.

Arcos Dorados is slated to report first-quarter 2022 results on May 18.

Performance Food Group’s shares have returned 12.1% in the year-to-date period.

Performance Food Group is scheduled to report third-quarter fiscal 2022 results on May 11.


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