Groupon’s Stock Soars As Strong North America Results Help Beat Estimates

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Groupon

Groupon‘s (NASDAQ:GRPN) stock soared 25% after it reported better than expected second quarter earnings, with both revenue and adjusted profits beating market expectations. Groupon reported 2% year-over-year (y-o-y) growth in revenue to $756 million, against market estimates of $711 million, driven by solid growth in North America. Its adjusted loss was 1 cent per share against consensus estimates of a loss of 2 cents per share.

In terms of geographies, 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. The company has already shut operations in 20 countries in the last 18 months and intends to exit from Indonesia by the end of the third quarter. This will take the company’s international presence to 26 countries, compared to 47 in January 2015. The table below provides an overview of the results.

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North America Revenues

North America, which has been the primary area of focus for the company, reported revenues of about $517 million for the quarter, an increase of 7% on a y-o-y basis. Gross billings for the region improved by 7.8% over the prior year quarter to $966 million while gross profits increased 10% y-o-y to $217.2 million. The renewed focus on North America led to an addition of 1.1 million customers during the quarter, which was the company’s best performance in the past nine quarters. grpn_cust

Outlook for the Year

Driven by its strong performance in North America, Groupon revised its full year revenue guidance from $2.75-3.05 billion to $3-3.1 billion. The company also revised its expected adjusted EBITDA figures from $85-135 million to $140-165 million for full year 2016. grpn_guid


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