Why Is Groupon (GRPN) Up 51.4% Since Last Earnings Report?
A month has gone by since the last earnings report for Groupon (GRPN). Shares have added about 51.4% 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 Q2 Loss Narrower Than Estimates, Revenues Down
Groupon reported a non-GAAP loss of 10 cents per share in second-quarter 2023, narrower than the Zacks Consensus Estimate of a loss of 17 cents. The company reported a non-GAAP loss of 34 cents per share in the year-ago quarter.
Revenues of $129.1 million beat the Zacks Consensus Estimate by 0.39%. The figure declined 15.7% on a year-over-year basis (down 16%, excluding the foreign exchange effect).
Region-wise, North America revenues of $95.8 million beat the consensus mark by 7.74% but slumped 14.5% year over year. International revenues of $33.3 million beat the consensus mark by 2.32% but fell 19% year over year (down 19.9%, excluding the foreign exchange effect).
Quarterly Details
Local revenues of $112.8 million beat the Zacks Consensus Estimate by 6.38% but declined 15.5% year over year (down 15.7%, excluding the foreign exchange effect). North America Local revenues declined 15.8%, while International Local revenues fell 14.8% year over year.
Consolidated Travel revenues of $7.8 million beat the consensus mark by 43.01% and increased 0.9% year over year. North America Travel revenues soared 25.3% year over year. International Travel revenues declined 32.8% in the reported quarter.
On a consolidated basis, Goods revenues of $8.5 million missed the consensus mark by 14.74% and declined 28.8% year over year. North America Goods revenues declined 23%, while International Goods revenues fell 35.1%, excluding the foreign exchange effect, on a year-over-year basis.
Customer Metrics
At the end of the second quarter, Groupon had approximately 17.5 million active customers compared with 21.1 million at the end of the prior-year quarter. The metric missed the Zacks Consensus Estimate by 3.48%.
At the end of the second quarter, the company had approximately 10.6 million active customers based in North America and 6.9 million active international customers, missing the consensus mark by 5.44% and 0.43%, respectively.
Operating Details
In the second quarter, gross profit came in at $113 million, down 15.7% year over year.
Selling, general and administrative expenses fell 22.3% year over year to $96.3 million in the reported quarter. Marketing expenses declined 24.2% to $22.3 million.
The company reported a GAAP operating loss of $4.9 million compared with a loss of $66.5 million in the year-ago quarter.
Balance Sheet & Cash Flow
Groupon exited the quarter with cash and cash equivalents of $118.1 million, down from $163.8 million as of Mar 31, 2023.
In the second quarter, the company generated $42.3 million in operating cash outflow against the operating cash outflow of $76.3 million generated in the prior quarter.
Groupon reported a free cash outflow of $44.6 million against $85.9 million of free cash flow reported in the previous quarter.
Guidance
For the third and the fourth quarter of 2023, Groupon expects to see slight improvements in the rate of year-over-year declines each quarter. It anticipates generating a positive adjusted EBITDA in the remaining two quarters.
How Have Estimates Been Moving Since Then?
Estimates review followed a downward path over the past two months.
VGM Scores
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 F on the value side, putting it in the fifth quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. 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 belongs to the Zacks Internet - Commerce industry. Another stock from the same industry, MercadoLibre (MELI), has gained 3.6% over the past month. More than a month has passed since the company reported results for the quarter ended June 2023.
MercadoLibre reported revenues of $3.42 billion in the last reported quarter, representing a year-over-year change of +31.5%. EPS of $5.16 for the same period compares with $2.43 a year ago.
MercadoLibre is expected to post earnings of $5.88 per share for the current quarter, representing a year-over-year change of +129.7%. Over the last 30 days, the Zacks Consensus Estimate has changed +2.9%.
MercadoLibre has a Zacks Rank #1 (Strong Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Groupon, Inc. (GRPN) : Free Stock Analysis Report
MercadoLibre, Inc. (MELI) : Free Stock Analysis Report
