Mid-Year Review: How Does Groupon’s Take Rate Vary Across Regions?

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Groupon (NASDAQ:GRPN) reported mixed earnings in the first two quarters of 2016, with revenue beating market expectations but its net loss growing to over $104 million compared to a profit of $95 million in the same period last year. The company’s gross billings and revenues grew year-over-year (y-o-y) in North America and declined in international markets, owing to its strategy to focus on the North American market and move away from certain low-margin goods businesses. However, Groupon’s revenue per gross billings or take rate shows a different trend over the last six quarters.

Despite a marginal decline in the take rate in North America this year, the company’s overall take rate improved about 240 basis points in Q2 2016 over the prior year quarter reflecting Groupon’s shift away from certain low-margin goods businesses and a slight improvement in the company’s pricing power in the international online coupon market. In this note, we discuss how the company’s take rate has trended in different geographies since last year.


In Q1 2016, Groupon’s gross billings grew by about 5% y-o-y in North America while they declined by 5% overall in the global market. A similar trend was observed in the second quarter when gross billings grew by about 8% y-o-y in North America while they declined by 2.4% overall in the global market. Gross billings refer to the total amount of transactions taking place through Groupon and the company’s revenue from such transactions depends on its commission rate or take rate on these deals. We calculate this rate by dividing the company’s gross billings to its revenues in the same period. GRPN-12

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Even as Groupon’s gross billings and revenues increased in North America and declined in international markets in the first two quarters, its take rate or revenue per gross billings witnessed a reverse trend. The company’s revenue per gross billings marginally declined y-o-y to 54% in North America in Q2 2016 and increased about 500 basis points to 52% in the EMEA region in the same period. Owing to the take rate improvement in international markets, the company’s overall take rate improved by 189 basis points y-o-y to well over 50% by the end of June 2016. grpn-13

This is indeed a positive trend for Groupon and it shows that the company is successfully moving away from certain low-margin businesses in international markets. Its growing marketing efforts are not only helping improve gross sales but also helping it increase its pricing power in the coupon-driven online shopping and services market.

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