Groupon Beats Q1 Profit Estimates But Stock Tumbles On Revenue Miss

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Groupon

Groupon‘s (NASDAQ:GRPN) stock fell over 13% after the company reported disappointing first quarter results with revenue missing market expectations by a wide margin. The company reported a decline of 4% year-over-year (y-o-y) in revenue to $673.6 million, against market estimates of about $724 million. Its adjusted earnings of 1 cent per share was 2 cents better than consensus estimates of a loss of 1 cent per share. This was primarily driven by cost cutting efforts by the company, including by reducing its headcount. Groupon’s general and administrative expenses declined by 12% y-o-y in the quarter ending March 2017.

In terms of geographies, the company’s gross billings and gross 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. Groupon has brought down its international presence from 47 countries in January 2015 to currently 15 countries, primarily in North America and Europe, to streamline its operations.

North America Results

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North America, which has been the primary area of focus for the company, reported revenues of about $473 million for the quarter, a decline of 5.5% on a y-o-y basis even as gross billings for the region improved by 3% over the prior year quarter to over $965 million. The renewed focus on North America led to an addition of 500,000 unique customers during the quarter, taking its global active user base to 48.3 million.

Outlook for 2017

Groupon reiterated its 2017 full year guidance in the recent earnings call in light of the current foreign exchange rates, expected marketing investments and cost benefits associated with the company’s streamlining initiatives. Groupon expects gross profit of $1.3-1.35 billion in 2017 compared to $1.36 billion in full year 2016. It also expects adjusted EBITDA to be in the range of $20o million and $240 million, against $178 million in full year 2016.


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