What To Expect From Groupon’s Q2 Results

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Groupon (NASDAQ:GRPN) is scheduled to report its earnings for the second quarter of 2016 on Wednesday, July 27. The company reported mixed financial results in the first quarter, with revenue beating market expectations but its net loss tripling over the prior year quarter. Groupon reported a 1% year-over-year (y-o-y) decline in revenue to $732 million, against market estimates of $718 million, driven by growth in North America. The company’s gross billings, revenues and profits declined in international markets, owing to its strategy to focus on the North American market and move away from certain low-margin goods businesses.grpn-34

Since taking over as Groupon CEO last November, Rich Williams has undertaken a series of bold measures such as significantly raising marketing investments, restructuring the international portfolio and moving away from certain low-margin goods businesses. These initiatives helped in improving sales in North America but took a toll on profits. In the upcoming Q2 results, both overall sales and earnings per share are expected to continue to decline, driven by declining international gross billings and higher marketing expenses. The company’s marketing expenses increased 71% y-o-y to about $90 million in Q1 2016, and are expected to increase further going forward as the company struggles to grow its customer base amid rising competition.

Groupon is expected to report revenues of around $712 million and a loss of $0.02 per share in Q2 2016, per consensus estimates compiled by Reuters. For full year 2016, Groupon expects revenues of $2.75-$3.05 billion and adjusted EBITDA to range between $80 million and $130 million.
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