Groupon beats by $0.03, beats on revenue
May 9, 2018 8:31 AM ET|By: Jignesh Mehta, SA News Editor
Groupon (NASDAQ:GRPN): Q1 EPS of $0.03 beats by $0.03.
Revenue of $626.54M (-7.0% Y/Y) beats by $22.75M.
Shares +15% PM.
Strong Growth in International, Voucherless, and Platform Initiatives;
Raises Full Year 2018 Adjusted EBITDA Outlook
* Gross profit of $324.9 million
* Net loss from continuing operations of $2.8 million
* Adjusted EBITDA of $52.6 million
* GAAP loss per diluted share of $0.01; non-GAAP earnings per diluted share of $0.03
* Operating cash flow of $148.9 million for the trailing twelve month period; Free cash flow of $83.7 million for the trailing twelve month period
* 2018 Adjusted EBITDA guidance raised to $280 million to $290 million
* Board of Directors approved $300 million share repurchase authorization
CHICAGO--(BUSINESS WIRE)-- Groupon, Inc. (NASDAQ: GRPN) today announced financial results for the quarter ended March 31, 2018.
"We're off to a solid start in 2018, highlighted by strong bottom line growth and continued execution against our strategy and key priorities. More than a million new customers enrolled in our voucherless Groupon+ program during the quarter and are beginning to experience the next generation of Groupon," said CEO Rich Williams. "In addition, we signed a number of new partnerships that connect more high quality local offers with our customer scale and solidify our position as a true platform in local. We're also excited about the strong momentum in our international business, thanks to significant progress on our product, supply and marketing initiatives."
First Quarter 2018 Summary
North America
During the quarter we continued to make progress on our customer experience and platform initiatives in North America. We recently announced several partnerships that further strengthen the inventory available on the Groupon platform. Additionally, we launched American Express to bolster our card linked offers platform and offer more choice to customers as we scale our voucherless experiences. We now have over 4.2 million cards linked in Groupon+™, one of our leading voucherless initiatives, and continue to deepen supply in our more than 25 Groupon+ markets.
North America gross profit in the first quarter 2018 decreased 1% to $219.7 million. In Local, gross profit decreased 2% to $166.8 million driven by our continued scaling of Groupon+ and the sale of certain OrderUp assets in the second half of 2017. Goods gross profit increased 1% to $36.9 million resulting from our continued focus on optimizing for gross profit. Gross profit in Travel increased 6% to $16.0 million.
North America active customers were 32.6 million as of March 31, 2018, and trailing twelve month gross profit per active customer increased 1%.
International
We generated positive results in International in the first quarter as we advanced our product, supply, and marketing initiatives. In Local, we ran our largest single International deal ever with Odeon, one of the largest cinema chains in the United Kingdom. In Goods, we made further operational improvements focused on driving long-term gross profit growth and improving the customer experience.
International gross profit increased 19% (5% FX-neutral) in the first quarter 2018 to $105.2 million. Gross profit increased 19% (5% FX-neutral) in Local, 26% (10% FX-neutral) in Goods, and 6% (7% FX-neutral decline) in Travel.
International active customers increased to 17.0 million as of March 31, 2018, and trailing twelve month gross profit per active customer increased 9%.
Consolidated
Revenue was $626.5 million in the first quarter 2018, down 7% (11% FX-neutral) reflecting our continued focus on revenue generation that maximizes gross profit.
Gross profit was $324.9 million in the first quarter 2018, up 5% (1% FX-neutral), led by growth in International.
SG&A declined 4% to $222.1 million in the first quarter 2018 as we continue to focus on operational efficiency.
Marketing expense was $99.2 million in the first quarter 2018, up 15%.
Net loss from continuing operations was $2.8 million in the first quarter 2018 compared to a net loss of $20.9 million in the first quarter 2017.
Net loss attributable to common stockholders was $6.9 million, or $0.01 per diluted share, compared to $24.4 million, or $0.04 per diluted share, in the first quarter 2017. Non-GAAP net income attributable to common stockholders was $16.2 million, or $0.03 per diluted share, compared to $5.2 million, or $0.01 per diluted share, in the first quarter 2017.
Adjusted EBITDA, a non-GAAP financial measure, was $52.6 million in the first quarter 2018, up 17% from $44.8 million in the first quarter 2017.
Global units sold declined 7% to 42.4 million in the first quarter 2018 as we continued to manage our business to maximize gross profit, which in some instances, resulted in fewer units. Units in North America were down 11% with a significant portion of that decline due to our focus on long-term gross profit optimization in Goods as well as our continued scaling of Groupon+ and the sale of certain OrderUp assets that occurred in the second half of 2017.
Operating cash flow was $148.9 million for the trailing twelve month period as of the first quarter 2018, and free cash flow, a non-GAAP financial measure, was $83.7 million for the trailing twelve month period.
Cash and cash equivalents as of March 31, 2018 were $725.9 million, and we had no outstanding borrowings under our $250 million revolving credit facility.
In May 2018, the Board of Directors approved a $300 million share repurchase authorization, which replaces the recently expired authorization. The timing and amount of share repurchases, if any, will be 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.
Definitions and reconciliations of all non-GAAP financial measures and additional information regarding operational measures are included below in the section titled "Terminology Changes, Non-GAAP Financial Measures and Operational Metrics" and in the accompanying tables. All comparisons are year-over-year unless otherwise provided.
Outlook
Groupon is raising its outlook for 2018, which reflects current foreign exchange rates and the Vouchercloud acquisition, which we expect to contribute $5 to $6 million to Adjusted EBITDA in 2018. For the full year 2018, Groupon now expects Adjusted EBITDA to be between $280 million and $290 million, an increase from the previously provided range of $260 million and $270 million.
