Groupon Surprises with Profit Amid Declining Revenues
Groupon (GRPN) reported adjusted earnings of 33 cents per share for the third quarter of 2024, significantly surpassing the Zacks Consensus Estimate of a loss of 25 cents by 232%. In contrast, the company had a loss of $1.31 per share during the same quarter last year.
In the past four quarters, Groupon has managed to beat the Zacks Consensus Estimate in three instances, while missing once. This has resulted in an average earnings surprise of 107.77%.
Stay informed about upcoming earnings reports with the Zacks Earnings Calendar.
Despite the positive earnings report, revenues of $114.5 million fell short of the consensus estimate by 3.8%. Compared to the previous year, this amounts to a 9% decrease (down 10%, excluding foreign exchange factors).
Analyzing the regional revenues, North America brought in $86.9 million, missing the consensus by 3.68%, and marking a 9% decline year over year. This drop was attributed to increased Local voucher redemption rates during the reported period. Meanwhile, international revenues were $27.6 million, also missing the consensus target by 4.85% and experiencing a 13% decrease compared to last year (down 14%, excluding foreign exchange impacts) due to the exit from the Local business in Italy.
Groupon, Inc. Price, Consensus and EPS Surprise
Groupon, Inc. price-consensus-eps-surprise-chart | Groupon, Inc. Quote
This year, GRPN has declined by 19.4%, even as the Zacks Retail-Wholesale sector has seen a growth of 25.4% during the same period.
Quarterly Review: GRPN’s Performance
Local revenues reached $105 million, falling short of the Zacks Consensus Estimate by 5.81% and dropping 9% year over year (10% lower without considering foreign exchange). North America Local revenues fell by 8%, whereas International Local revenues recorded a minor decline of 2% year over year.
On the other hand, consolidated Travel revenues totaled $4.3 million, exceeding expectations by 7.28% and reflecting a year-over-year increase of 3.4%. North America Travel revenues saw a significant rise of 13.3%, though International Travel revenues experienced a decline of 12.7%.
In the Goods segment, revenues of $5.2 million surpassed the consensus by 14.58%, even as they declined 23.8% from the previous year. Specifically, North America Goods revenues dropped by 34.5%, while International Goods revenues decreased by 11.7% year over year (excluding foreign exchange impacts).
Customer Metrics of GRPN
At the end of the third quarter, Groupon had around 15.5 million active customers, down from 17 million last year. However, this number did exceed the Zacks Consensus Estimate by 3.68%.
In more detail, North America accounted for approximately 10.2 million active customers, which beat the consensus estimate by 6.58%. On the contrary, the international segment saw 5.3 million active customers, falling short of expectations by 1.49%.
Operating Highlights for GRPN
During the third quarter, Groupon reported a gross profit of $102.9 million, reflecting a year-over-year decrease of 7%.
On the expense side, selling, general, and administrative costs reduced by 10.8% to $71.3 million, primarily due to lower cloud expenditures. Meanwhile, marketing expenses surged by 25.4% to reach $36.3 million.
The company faced a GAAP operating loss of $5.6 million, in contrast to a loss of $464,000 in the same quarter last year.
Balance Sheet and Cash Flow Overview
At the end of the quarter, Groupon had cash and equivalents totaling $159.7 million, down from $178.1 million as of June 30, 2024.
Groupon reported an operating cash outflow of $16.3 million in the third quarter, compared to a cash inflow of $15.3 million in the previous quarter.
The company also recorded a free cash outflow of $19.7 million, opposed to a free cash inflow of $10.8 million in the previous quarter.
Additionally, GRPN has entered an agreement to acquire $197 million in new secured convertible debt, which will mature in 2027 with a 6.25% coupon and a $30 strike price.
Forward Guidance from GRPN
For the fourth quarter of 2024, Groupon anticipates revenues ranging from $124 million to $131 million, representing a year-over-year decline of 10% to 5%. The Zacks Consensus Estimate for fourth-quarter 2024 revenues stands at $144.38 million, suggesting a potential growth of 4.83%.
Expected adjusted EBITDA is projected between $14 million and $19 million.
Groupon is also expecting a positive free cash flow for the fourth quarter.
For the full year 2024, revenues are expected to fall between $486 million and $493 million, indicating a year-over-year change in the range of -6% to -4%.
Adjusted EBITDA is anticipated to be between $65 million and $70 million, with an expected positive free cash flow for 2024.
Current Zacks Rank and Investment Options
Presently, Groupon holds a Zacks Rank #3 (Hold).
For investors considering the broader retail-wholesale sector, stocks such as Booking Holdings (BKNG), Amazon (AMZN), and Travelzoo (TZOO) are currently rated higher, each holding a Zacks Rank #2 (Buy).
BKNG has realized a gain of 41.6% this year, with a long-term earnings growth rate currently estimated at 15.68%.
Amazon shares have increased by 38.1% year-to-date, with long-term earnings growth expected at 20%.
Travelzoo has shown remarkable performance with a 100.7% gain this year, and its long-term earnings growth rate is projected at 8.72%.
Upcoming Investment Opportunities
Recently published: Financial experts have identified seven outstanding stocks from a pool of 220 Zacks Rank #1 Strong Buys, which they consider most likely for early gains.
Since 1988, this comprehensive list has successfully outperformed the market, achieving an average gain of +23.7% annually. Therefore, it is advisable to pay immediate attention to these selected seven stocks.
Want timely insights from Zacks Investment Research? Download your free report on 5 Stocks Set to Double today.
Amazon.com, Inc. (AMZN): Free Stock Analysis Report
Groupon, Inc. (GRPN): Free Stock Analysis Report
Travelzoo (TZOO): Free Stock Analysis Report
Booking Holdings Inc. (BKNG): Free Stock Analysis Report
To read this article on Zacks.com, click here.
Zacks Investment Research
The views and opinions expressed in this article are those of the author and do not necessarily reflect those of Nasdaq, Inc.
