Groupon Post-Earnings Outlook: What To Expect Through 2018?

by Trefis Team
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Groupon (NASDAQ:GRPN) announced its Q1 2018 earnings on May 9, reporting a 7% year-over-year decline in revenues to $627 million. Groupon has undergone some major restructuring in recent years, with the company’s management taking a bold decision to exit some key markets. Groupon was operating in almost 50 countries a few years ago, a figure which is now down to 15. In terms of financial reporting, the company now reports a single international segment as compared to separate EMEA and Rest of World segments previously. The company took these steps in an attempt to boost profits, and it has largely been a success through 2017. For the March quarter, North America revenue fell 17% y-o-y to $393 million while International revenue picked up 16% on a y-o-y basis to $233 million.

It is interesting to note that the third-party business has performed well in North America, while direct sales have been the key growth driver in international markets. Accordingly, margins improved in North America and compressed in international markets, as the third-party business has higher margins. Going forward, we expect the trend to continue through the end of the year. North America revenues are expected to fall 10% to $1.7 billion for the year. On the other hand, we forecast International revenues to increase 13% to just over $1 billion through the year. We expect margins to remain roughly flat over 2017 levels, with earnings and EPS also staying at 2017 levels. Our EPS forecast for Groupon for the year stands at 18 cents a share, compared to 17 cents in 2017, and is about in line with the consensus estimates. We have summarized our full year expectations for Groupon on our interactive analysis platform.  You can change expected segment revenue and margin figures for Groupon to gauge how it will impact expected EPS for the year.

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