Marioooooo, you may have missed your re-entry point.
GRPN Announces Third Quarter 2017 Results
Wed November 1, 2017 8:30 AM
Business Wire
Q3: 10-30-17 Earnings Summary
EPS of $0.01
Achieves 13% Unit Growth in North America Local; Raises Full Year Outlook
Gross profit of $309.4 million
Net income from continuing operations of $3.8 million
Adjusted EBITDA of $46.6 million
GAAP income per share from continuing operations of $0.00; non-GAAP income per share of $0.01
Operating cash flow of $161.5 million for the trailing twelve month period; Free cash flow of $98.6 million for the trailing twelve month period
Raises 2017 gross profit guidance range to $1.305 billion to $1.355 billion and 2017 Adjusted EBITDA guidance range to $225 million to $245 million
CHICAGO--(BUSINESS WIRE)-- Groupon, Inc. (NASDAQ: GRPN) today announced financial results for the quarter ended September 30, 2017.
“We delivered another solid quarter while continuing to invest in the growth and development of our local marketplace," said Groupon CEO Rich Williams. "We continued to see strong demand in our core local business and scale our voucherless products like Groupon+.”
Third Quarter 2017 Summary
North America
North America gross profit in the third quarter 2017 increased 3% to $207.9 million from $201.7 million in the third quarter 2016 driven by strength in July, which was partially offset by softer spending in markets affected by the hurricanes in late August and early September. In Local, gross profit increased 7% to $162.9 million as unit growth accelerated for the fourth consecutive quarter to the low teens. Gross profit in Goods was $30.9 million versus $31.5 million in the third quarter 2016, while Travel was $14.1 million versus $17.3 million in the third quarter 2016.
Strength in the Local category was driven by an increase in active customers and expanded supply through third party partners and premier national brands. In addition, we have continued to make improvements to the customer experience. Groupon+, one of our leading voucherless initiatives, is now live in 23 markets.
Our focus is to maximize gross profit, which may come at the expense of revenue. This emphasis includes an increasing shift toward offerings in our higher margin, more differentiated Local category, from our Goods category. In the third quarter 2017, North America revenue decreased 14% driven by a 30% decline in Goods direct revenue transactions, which are presented on a gross basis. Additionally, we estimate the hurricanes had a $5 million negative impact on revenue and $4 million on gross profit in the third quarter 2017.
North America active customers reached 32.5 million as of September 30, 2017, adding 600 thousand net new active customers during the third quarter 2017. Active customers represent unique user accounts that have made a purchase during the trailing twelve months either through one of our online marketplaces or directly with a merchant for which we earned a commission.
International
International gross profit increased 11% (7% FX-neutral) in the third quarter 2017 to $101.5 million. Gross profit increased 15% (11% FX-neutral) in Local and grew 24% (18% FX-neutral) in Goods, partially offset by a 28% (31% FX-neutral) decline in Travel. We began to see early traction from our supply, marketing, and product initiatives in the third quarter 2017, and believe these initiatives will enable us to continue our turnaround of international in the coming quarters.
International active customers increased 200 thousand during the third quarter 2017 to 16.6 million as of September 30, 2017.
Consolidated
Gross billings were $1.34 billion in the third quarter 2017, up 1% (flat FX-neutral) from $1.32 billion in the third quarter 2016. Gross billings reflect the total dollar value of customer purchases of goods and services.
Revenue was $634.5 million in the third quarter 2017, down 8% (9% FX-neutral) from $686.6 million in the third quarter 2016 reflecting our strategic emphasis on our Local category, resulting in lower revenue from Goods.
Gross profit was $309.4 million in the third quarter 2017, up 6% (4% FX-neutral) from $293.3 million in the third quarter 2016.
SG&A declined 8% year-over-year to $214.8 million in the third quarter 2017 as we continued to drive operational efficiency through automation and our more streamlined organization, which we expect not only to improve our customer experience but also to create greater operating leverage over time.
Marketing was $101.5 million in the third quarter 2017, up 20% year-over-year. We launched an integrated offline campaign in 3 cities for Groupon+ across TV, radio and out-of-home advertising.
Net income from continuing operations was $3.8 million in the third quarter 2017, which included a $17.1 million gain on an asset sale partially offset by $11.5 million in restructuring charges. This compares to a net loss of $34.4 million in the third quarter 2016.
Net income attributable to common stockholders was $0.1 million, or $0.00 per share. Non-GAAP net income attributable to common stockholders was $6.8 million, or $0.01 per share.
Adjusted EBITDA, a non-GAAP financial measure, was $46.6 million in the third quarter 2017, up 43% from $32.6 million in the third quarter 2016.
Global units sold declined 1% year-over-year to 44.1 million in the third quarter 2017. Units in North America were flat as low teens growth in Local was offset by a decline in Goods. International units declined 1%. Units are defined as purchases before refunds and cancellations made either through one of our online marketplaces or directly with a merchant for which we earned a commission.
Operating cash flow was $161.5 million for the trailing twelve month period as of the third quarter 2017. Free cash flow, a non-GAAP financial measure, was $98.6 million for the trailing twelve month period ending September 30, 2017.
Cash and cash equivalents as of September 30, 2017 were $638.7 million, and we had no outstanding borrowings under our $250.0 million revolving credit facility.
Definitions and reconciliations of all non-GAAP financial measures and additional information regarding operational measures are included below in the section titled “Non-GAAP Financial and Operational Measures” and in the accompanying tables.
Share Repurchase
During the third quarter 2017, Groupon repurchased 2,384,200 shares of its common stock for an aggregate purchase price of $9.2 million. Groupon repurchased 16,906,334 shares for an aggregate purchase price of $60.0 million for the year-to-date period as of September 30, 2017. Up to $135.2 million of common stock was available for repurchase under Groupon’s share repurchase program as of September 30, 2017. The timing and amount of any share repurchases, if any, are determined based on market conditions, limitations under our Amended and Restated Credit Agreement, share price and other factors, and the program may be terminated at any time.
Outlook
Groupon is updating its outlook for 2017, which reflects current foreign exchange rates, as well as expected marketing investments and cost benefits associated with our streamlining initiatives. The basis for our full year 2017 guidance is continuing operations.
For the full year 2017, Groupon is raising its expected gross profit guidance range to $1.305 billion to $1.355 billion.
Groupon is raising its expected Adjusted EBITDA guidance range to $225 million to $245 million in 2017.
