Groupon's (GRPN) Q2 Earnings and Revenues Beat Estimates
Groupon GRPN reported second-quarter 2020 non-GAAP loss of 93 cents per share, narrower than the Zacks Consensus Estimate of a loss of $2.63. Notably, the company had reported earnings of 24 cents reported in the prior-year quarter.
Revenues of $396 million beat the Zacks Consensus Estimate by 115.2%. The figure however declined 26% on a year-over-year basis (down 25% excluding foreign exchange effect).
Region-wise, North America revenues decreased 28.1% from the year-ago quarter to $233.3 million. International revenues fell 21.9% (down 20% excluding foreign exchange effect) year over year to $162.2 million.
Quarter Details
Service revenues (28.4% of revenues) were down 59.5% year over year to $112.38 million. However, Product revenues (71.5% of revenues) increased 11.1% to $283.2 million.
Local revenues of $99.7 million declined 59.6% from the year-ago quarter. North America Local revenues decreased 53.8% and International Local revenues fell 73.6%, excluding foreign exchange effect.
Groupon, Inc. Price, Consensus and EPS Surprise
Groupon, Inc. price-consensus-eps-surprise-chart | Groupon, Inc. Quote
Goods revenues increased 11.9% year over year to $292.4 million. North America Goods revenues increased 13.4%. International Goods revenues increased 13.1%, excluding foreign exchange effect.
Travel revenues fell 85.6% year over year to $3.48 million. North America Travel revenues plunged 84.3%. International Travel revenues declined 88.5%, excluding foreign exchange effect.
In the second quarter, gross billings were $582.7 million, down 47.5%, excluding foreign exchange effect.
North America billings were $352.5 million, down 52.1% year over year. International billings were $230.2 million, down 38.8% excluding foreign exchange effect.
North America Local and Travel gross billings declined 66.8% and 86.3%, respectively while Goods gross billings increased 17.8% on a year-over-year basis.
International Local and Travel gross billings declined 68.9% and 79.6%, respectively while Goods gross billings increased 18% on a year-over-year basis, excluding foreign exchange effect.
Global units sold during the reported quarter declined 35% year over year to 23 million, primarily owing to the coronavirus crisis-induced negative impact on demand. North America units were down 64% in Local but up 31% in Goods. International units were down 72% in Local but up 44% in Goods.
Customer Metrics
As of Jun 30, 2020, Groupon had approximately 15.3 million active customers internationally compared with 16.5 million at the end of the previous quarter.
Moreover, as of Jun 30, 2020, the company had approximately 22.8 million active customers based in North America compared with 25.3 million at the end of the prior quarter.
Operating Details
Gross profit in the second quarter came in at $137.2 million, down 53% (down 53%, excluding foreign exchange effect) year over year.
International gross profit decreased 61% year over year, excluding foreign exchange effect, to $35.5 million. Coronavirus crisis had a negative impact on demand.
International Local and Travel gross profit decreased 77% and 89%, respectively while Goods gross profit remained flat on a year-over-year basis, excluding foreign exchange effect.
Moreover, North America’s gross profit fell 49% to $101.7 million, primarily due to the impacts of coronavirus on volume. North America Local and Travel gross profit decreased 55% and 85%, respectively while Goods gross profit remained flat on a year-over-year basis.
Adjusted EBITDA came in at $1.3 million compared with adjusted EBITDA of $46.5 million reported in the prior-year quarter.
Selling, general and administrative (SG&A) expenses decreased 31.7% year over year to $143.6 million in the reported quarter.
Marketing expenses declined 71.6% to $25.2 million, primarily owing to lower offline marketing investments and accelerated traffic declines.
The company incurred operating loss of $72.1 million compared with operating loss of $7.1 million in the prior-year quarter.
Balance Sheet & Cash Flow
Groupon exited the quarter ending Jun 30, 2020, with cash and cash equivalents of $784.6 million, up from $666.9 million, as of Mar 31, 2020.
As of Jun 30, 2020, the company had $200 million of outstanding borrowings under revolving credit facility.
The company generated $70.7 million of operating cash flow compared with $236.4 million utilized in the prior quarter.
Free cash outflow came was $12.6 million compared to $247 million of free cash flow reported in the previous quarter.
Guidance
For third-quarter 2020, Groupon projects adjusted EBITDA loss of $10 million.
Zacks Rank & Stocks to Consider
Groupon currently carries a Zacks Rank #4 (Sell).
Cars.com Inc. CARS, Fiverr International FVRR and MercadoLibre, Inc. MELI are some better-ranked stocks in the broader Retail-wholesale sector.
Cars.com currently sports a Zacks Rank #1 (Strong Buy). The Zacks Consensus Estimate for 2020 earnings has been revised upward to $1.22 per share in the past 30 days from a loss of 6 cents per share. You can see the complete list of today’s Zacks #1 Rank stocks here.
Fiverr currently carries a Zacks Rank #2 (Buy). The consensus mark for 2020 has narrowed to a loss of 18 cents per share from loss of 21 cents over the past 30 days.
MercadoLibre currently carries a Zacks Rank #2 .The Zacks Consensus Estimate for 2020 has narrowed to a loss of 95 cents per share from a loss of $1.04 over the past 30 days.
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