GRPN
$3.68
Groupon Cl A Cmn
($.15)
(3.92%)
Earnings Details
1st Quarter March 2017
Wednesday, May 03, 2017 8:32:01 AM
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Summary

Groupon Cl A Cmn Misses

Groupon Cl A Cmn (GRPN) reported 1st Quarter March 2017 earnings of $0.01 per share on revenue of $673.6 million. The consensus estimate was a loss of $0.02 per share on revenue of $721.2 million. The Earnings Whisper number was $0.01 per share. Revenue fell 8.0% compared to the same quarter a year ago.

The company said it continues to expect Adjusted EBITDA of $200.0 million to $240.0 million for the year ending December 31, 2017.

Groupon Inc provides a local e-commerce marketplace that connects merchants to consumers by offering goods and services at discount. The Company features a daily deal on stuff to do, see, eat, and buy.

Results
Reported Earnings
$0.01
Earnings Whisper
$0.01
Consensus Estimate
($0.02)
Reported Revenue
$673.6 Mil
Revenue Estimate
$721.2 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Groupon Announces First Quarter 2017 Results

Gross profit of $309.5 million

--Net loss from continuing operations of $20.9 million

--Adjusted EBITDA of $44.8 million

--GAAP loss per share of $0.04; non-GAAP income per share of $0.01

Operating cash flow of $67.5 million for the trailing twelve month period; Free cash flow of $5.0 million for the trailing twelve month period

Added 500 thousand net new customers in North America, bringing North America active customers to 31.6 million; global active customers reached 48.3 million

Maintains 2017 gross profit guidance of $1.30 billion to $1.35 billion and 2017 Adjusted EBITDA guidance of $200 million to $240 million

Groupon, Inc. (GRPN) today announced financial results for the quarter ended March 31, 2017.

"In the first quarter, we continued to make solid progress in our mission to be the daily habit in local commerce," said CEO Rich Williams. "Our focus on growing customers in our marketplace, significantly improving the customer experience and continuing to streamline and simplify our business helped drive a 42 percent year-over-year increase in Adjusted EBITDA and gross profit of $309 million for the quarter."

As of March 31, 2017, Groupon has completed the dispositions of our operations in 11 countries. Accordingly, the results of our operations in those 11 countries are presented as discontinued operations, appearing net of tax in a single line in the company’s consolidated statements of operations. Prior period results have been updated to reflect that discontinued operations presentation.

First Quarter 2017 Summary

North America

North America gross profit in the first quarter 2017 increased 2% to $220.9 million from $215.9 million in the first quarter 2016. In Local, gross billings increased 9% and revenue increased 4%, resulting in 3% growth in gross profit as increased transaction volume was partially offset by higher promotional activity. In Goods, gross billings and revenue declined 11% and 12%, respectively, while gross profit increased 1%. Gross billings reflect the total dollar value of customer purchases of goods and services.

We are increasingly focusing the business on initiatives that are intended to maximize gross profit. These changes, including an increasing shift toward offerings in our higher margin Local category from our Goods category, had an unfavorable impact on North America revenue in the first quarter 2017 despite increased overall billings. North America revenue decreased 5% driven by a 12% decline in Goods direct revenue transactions, which are presented on a gross basis.

North America active customers reached 31.6 million as of March 31, 2017, adding 500 thousand during the first quarter 2017. Active customers represent unique user accounts that have made a purchase through one of our online marketplaces during the trailing twelve months.

International

International gross profit declined 15% (12% FX-neutral) in the first quarter 2017 to $88.5 million as we experienced some execution challenges and short-term disruption from our country exits. Gross profit declined across all categories on an FX-neutral basis, including a 4% decline in Local, 9% decline in Travel, and 31% decline in Goods. We made progress across several supply, marketing, and product initiatives toward the end of Q1 and into Q2, and believe our current initiatives will enable us to stabilize gross profit internationally in the coming quarters.

International active customers were roughly flat sequentially at 16.7 million as of March 31, 2017.

Consolidated

Gross billings were $1.36 billion in the first quarter 2017, down 1% (flat FX-neutral) from $1.37 billion in the first quarter 2016.

Revenue was $673.6 million in the first quarter 2017, down 4% (3% FX-neutral) from $698.4 million in the first quarter 2016.

Gross profit was $309.5 million in the first quarter 2017, down 3% (2% FX-neutral) from $320.1 million in the first quarter 2016.

SG&A declined 12% year-over-year in the first quarter 2017 as we continue to drive operational efficiency through automation and our more streamlined organization, which we expect not only to improve our customer experience but also create greater operating leverage over time. We ended the first quarter 2017 with headcount of 7,120 and took actions in April 2017 to further rationalize our cost structure, reducing headcount by approximately 4%.

Marketing was $86.3 million, down 1% year-over-year. We launched our offline campaign "Save Up to $100 a Week on What You Do Every Day" toward the end of February 2017.

Net loss from continuing operations was $20.9 million in the first quarter 2017, compared with $43.5 million in the first quarter 2016. Net loss attributable to common stockholders was $24.4 million, or $0.04 per share. Non-GAAP net income attributable to common stockholders was $5.2 million, or $0.01 per share.

Adjusted EBITDA, a non-GAAP financial measure, was $44.8 million in the first quarter 2017, compared with $31.5 million in the first quarter 2016.

Global units sold declined 3% year-over-year to 45.7 million. Units in North America were flat driven by high single digit growth in Local and declines in Goods, while International declined 9%. Units are defined as purchases made through our online marketplaces, before refunds and cancellations.

Operating cash flow was $67.5 million for the trailing twelve month period as of the first quarter 2017. Free cash flow, a non-GAAP financial measure, was $5.0 million for the trailing twelve month period as of the first quarter 2017.

Cash and cash equivalents as of March 31, 2017 were $691.0 million, and we had no outstanding borrowings under our $250.0 million revolving credit facility.

Definitions and reconciliations of all non-GAAP financial measures are included below in the section titled "Non-GAAP Financial Measures" and in the accompanying tables.

Share Repurchase

During the first quarter 2017, Groupon repurchased 7,336,681 shares of its common stock for an aggregate purchase price of $26.0 million. Groupon repurchased 31,744,424 shares for an aggregate purchase price of $125.0 million for the trailing twelve month period as of the first quarter 2017. Up to $169.0 million of common stock was available for repurchase under Groupon’s share repurchase program as of March 31, 2017. The timing and amount of any share repurchases are determined based on market conditions, limitations under our Amended and Restated Credit Agreement, share price and other factors, and the program may be discontinued or suspended at any time.

Outlook

Groupon is reiterating 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 expects gross profit to be in the range of $1.30 billion to $1.35 billion.

Groupon expects Adjusted EBITDA to be in the range of $200 million to $240 million in 2017.

Conference Call

A conference call will be webcast live today at 9:00 a.m. CDT / 10:00 a.m. EDT and will be available on Groupon’s investor relations website at http://investor.groupon.com. This call will contain forward-looking statements and other material information regarding the Company’s financial and operating results.

Groupon encourages investors to use its investor relations website as a way of easily finding information about the company. Groupon promptly makes available on this website, free of charge, the reports that the company files or furnishes with the SEC, corporate governance information (including Groupon’s Global Code of Conduct), and select press releases and social media postings. Groupon uses its investor relations site (investor.groupon.com) and its blog (https://www.groupon.com/blog) as a means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD.

Non-GAAP Financial Measures

In addition to financial results reported in accordance with U.S. GAAP, we have provided the following non-GAAP financial measures: Adjusted EBITDA, non-GAAP net income (loss) attributable to common stockholders, non-GAAP earnings (loss) per share, free cash flow and foreign currency exchange rate neutral operating results. These non-GAAP financial measures, which are presented on a continuing operations basis, are intended to aid investors in better understanding our current financial performance and prospects for the future as seen through the eyes of management. We believe that these non-GAAP financial measures facilitate comparisons with our historical results and with the results of peer companies who present similar measures (although other companies may define non-GAAP measures differently than we define them, even when similar terms are used to identify such measures). However, these non-GAAP financial measures are not intended to be a substitute for those reported in accordance with U.S. GAAP. For reconciliations of these measures to the most applicable financial measures under U.S. GAAP, see "Non-GAAP Reconciliation Schedules" and "Supplemental Financial Information and Business Metrics" included in the tables accompanying this release.

We exclude the following items from one or more of our non-GAAP financial measures:

Stock-based compensation. We exclude stock-based compensation because it is primarily non-cash in nature and we believe that non-GAAP financial measures excluding this item provide meaningful supplemental information about our operating performance and liquidity.

Acquisition-related expense (benefit), net. Acquisition-related expense (benefit), net is comprised of the change in the fair value of contingent consideration arrangements and external transaction costs related to business combinations, primarily consisting of legal and advisory fees. The composition of our contingent consideration arrangements and the impact of those arrangements on our operating results vary over time based on a number of factors, including the terms of our business combinations and the timing of those transactions. We exclude acquisition-related expense (benefit), net because we believe that non-GAAP financial measures excluding this item provide meaningful supplemental information about our operating performance and facilitate comparisons to our historical operating results.

Depreciation and amortization. We exclude depreciation and amortization expenses because they are non-cash in nature and we believe that non-GAAP financial measures excluding these items provide meaningful supplemental information about our operating performance and liquidity.

Interest and Other Non-Operating Items. Interest and other non-operating items include: gains and losses related to minority investments, foreign currency gains and losses, interest income and interest expense, including non-cash interest expense from our convertible senior notes. We exclude interest and other non-operating items from certain of our non-GAAP financial measures because we believe that excluding these items provides meaningful supplemental information about our core operating performance and facilitates comparisons to our historical operating results.

Special Charges and Credits. For the three months ended March 31, 2017 and 2016, special charges and credits included charges related to our restructuring plan. We exclude special charges and credits from Adjusted EBITDA because we believe that excluding those items provides meaningful supplemental information about our core operating performance and facilitates comparisons with our historical results.

Income Tax Effect of Items Excluded from Non-GAAP Financial Measures. We determine the income tax effect of items excluded from our measures of non-GAAP net income (loss) attributable to common stockholders and non-GAAP earnings (loss) per share by performing a tax provision calculation using pre-tax income (loss) amounts that have been adjusted to exclude those items in the respective jurisdictions to which they relate. The difference between the income tax expense (benefit) determined on that basis and our reported income tax expense (benefit) represents the income tax effect of the excluded items.

Descriptions of the non-GAAP financial measures included in this release and the accompanying tables are as follows:

Foreign exchange rate neutral operating results show our current period operating results as if foreign currency exchange rates had remained the same as those in effect in the prior-year period. We present foreign exchange rate neutral information to facilitate comparisons to our historical operating results.

Adjusted EBITDA is a non-GAAP financial measure that we define as net income (loss) from continuing operations excluding income taxes, interest and other non-operating items, depreciation and amortization, stock-based compensation, acquisition-related expense (benefit), net, and other special charges and credits. Our definition of Adjusted EBITDA may differ from similar measures used by other companies, even when similar terms are used to identify such measures. Adjusted EBITDA is a key measure used by our management and Board of Directors to evaluate operating performance, generate future operating plans, and make strategic decisions regarding the allocation of capital. Accordingly, we believe that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating performance in the same manner as our management and Board of Directors.

Non-GAAP net income (loss) attributable to common stockholders and non-GAAP earnings (loss) per share are non-GAAP performance measures that adjust our net income (loss) attributable to common stockholders and earnings (loss) per share to exclude the impact of:

-- stock-based compensation,

-- amortization of acquired intangible assets,

-- acquisition-related expense (benefit), net,

-- special charges and credits, including restructuring charges,

-- non-cash interest expense on convertible senior notes,

non-operating foreign currency gains and losses related to intercompany balances and reclassifications of cumulative translation adjustments to earnings as a result of business dispositions or country exits,

non-operating gains and losses from minority investments that we have elected to record at fair value with changes in fair value reported in earnings,

-- income (loss) from discontinued operations, and

-- the income tax effect of those items.

We believe that excluding the above items from our measures of non-GAAP net income (loss) attributable to common stockholders and non-GAAP earnings (loss) per share provides useful supplemental information for evaluating our operating performance and facilitates comparisons to our historical results by eliminating items that are non-cash in nature, relate to discrete events, or are otherwise not indicative of the core operating performance of our ongoing business.

Free cash flow is a non-GAAP financial measure that comprises net cash provided by (used in) operating activities from continuing operations less purchases of property and equipment and capitalized software from continuing operations. We use free cash flow to conduct and evaluate our business because, although it is similar to cash flow from operations, we believe that it typically represents a more useful measure of cash flows because purchases of fixed assets, software developed for internal-use, and website development costs are necessary components of our ongoing operations. Free cash flow is not intended to represent the total increase or decrease in Groupon’s cash balance for the applicable period.

Note on Forward-Looking Statements

The statements contained in this release that refer to plans and expectations for the next quarter, the full year or the future are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that involve a number of risks and uncertainties, and actual results could differ materially from those discussed. The words "may," will," should," "could," "expect," anticipate," "believe," "estimate," intend," "continue" and other similar expressions are intended to identify forward-looking statements. These forward-looking statements involve risks and uncertainties that could cause our actual results to differ materially from those expressed or implied in our forward-looking statements. Such risks and uncertainties include, but are not limited to, volatility in our revenue and operating results; risks related to our business strategy, including our strategy to grow our local marketplaces, marketing strategy and spend and the productivity of those marketing investments; effectively dealing with challenges arising from our international operations, including fluctuations in currency exchange rates and any potential adverse impact from the United Kingdom’s likely exit from the European Union; retaining existing customers and adding new customers; retaining and adding high quality merchants; cyber security breaches; incurring expenses as we expand our business; competing successfully in our industry; maintaining favorable payment terms with our business partners; providing a strong mobile experience for our customers; delivery and routing of our emails; product liability claims; managing inventory and order fulfillment risks; integrating our technology platforms; litigation; managing refund risks; retaining, attracting and integrating members of our executive team; difficulties, delays or our inability to successfully complete all or part of the announced restructuring actions or to realize the operating efficiencies and other benefits of such restructuring actions; higher than anticipated restructuring charges or changes in the timing of such restructuring charges; completing and realizing the anticipated benefits from acquisitions, dispositions, joint ventures and strategic investments; tax liabilities; tax legislation; compliance with domestic and foreign laws and regulations, including the CARD Act and regulation of the Internet and e-commerce; classification of our independent contractors; maintaining our information technology infrastructure; protecting our intellectual property; maintaining a strong brand; seasonality; customer and merchant fraud; payment-related risks; our ability to raise capital if necessary and our outstanding indebtedness; global economic uncertainty; the impact of our ongoing strategic review and any potential strategic alternatives we may choose to pursue; our senior convertible notes; and our ability to realize the anticipated benefits from the hedge and warrant transactions. For additional information regarding these and other risks and uncertainties, we urge you to refer to the factors included under the headings "Risk Factors" and "Management’s Discussion and Analysis of Financial Condition and Results of Operations" in the company’s Annual Report on Form 10-K for the year ended December 31, 2016, and our other filings with the Securities and Exchange Commission, copies of which may be obtained by visiting the company’s Investor Relations web site at http://investor.groupon.com or the SEC’s web site at www.sec.gov. Groupon’s actual results could differ materially from those predicted or implied and reported results should not be considered an indication of future performance.

You should not rely upon forward-looking statements as predictions of future events. Although Groupon believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur. Moreover, neither the company nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. The forward-looking statements reflect Groupon’s expectations as of May 3, 2017. Groupon undertakes no obligation to update publicly any forward-looking statements for any reason after the date of this release to conform these statements to actual results or to changes in its expectations.

About Groupon

Groupon (GRPN) is building the daily habit in local commerce, offering a vast mobile and online marketplace where people discover and save on amazing things to do, eat, see and buy. By enabling real-time commerce across local businesses, travel destinations, consumer products and live events, shoppers can find the best a city has to offer.

Groupon is redefining how small businesses attract and retain customers by providing them with customizable and scalable marketing tools and services to profitably grow their businesses.

To download Groupon’s top-rated mobile apps, visit www.groupon.com/mobile. To search for great deals or subscribe to Groupon emails, visit www.groupon.com. To learn more about the company’s merchant solutions and how to work with Groupon, visit www.groupon.com/merchant.

Groupon, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except share and per share amounts)
March 31, 2017
December 31, 2016
(unaudited)
Assets
Current assets:
Cash and cash equivalents
$
690,975
$
862,977
Accounts receivable, net
63,732
71,272
Prepaid expenses and other current assets
88,512
94,441
Current assets of discontinued operations
--
63,246
Total current assets
843,219
1,091,936
Property, equipment and software, net
158,222
169,452
Goodwill
275,978
274,551
Intangible assets, net
37,995
42,915
Investments (including $112,606 and $110,066 at March 31, 2017 and
145,003
141,882
December 31, 2016, respectively, at fair value)
Deferred income taxes
5,118
5,151
Other non-current assets
18,300
23,484
Non-current assets of discontinued operations
--
12,006
Total Assets
$
1,483,835
$
1,761,377
Liabilities and Equity
Current liabilities:
Accounts payable
$
18,805
$
28,551
Accrued merchant and supplier payables
637,693
770,992
Accrued expenses and other current liabilities
335,531
366,456
Current liabilities of discontinued operations
--
47,052
Total current liabilities
992,029
1,213,051
Convertible senior notes, net
181,582
178,995
Deferred income taxes
1,745
1,714
Other non-current liabilities
97,090
99,628
Non-current liabilities of discontinued operations
--
2,927
Total Liabilities
1,272,446
1,496,315
Commitments and contingencies
Stockholders’ Equity
Common stock, par value $0.0001 per share, 2,010,000,000 shares
74
74
authorized, 741,388,884 shares issued and 562,356,295 shares
outstanding at March 31, 2017 and 736,531,771 shares issued and
564,835,863 shares outstanding at December 31, 2016
Additional paid-in capital
2,127,405
2,112,728
Treasury stock, at cost, 179,032,589 shares at March 31, 2017 and
(833,451 )
(807,424 )
171,695,908 shares at December 31, 2016
Accumulated deficit
(1,126,658 )
(1,099,010 )
Accumulated other comprehensive income (loss)
42,795
58,052
Total Groupon, Inc. Stockholders’ Equity
210,165
264,420
Noncontrolling interests
1,224
642
Total Equity
211,389
265,062
Total Liabilities and Equity
$
1,483,835
$
1,761,377
Groupon, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except share and per share amounts)
(unaudited)
Three Months Ended March 31,
2017
2016
Revenue:
Third-party and other
$
301,577
$
309,629
Direct
372,049
388,806
Total revenue
673,626
698,435
Cost of revenue:
Third-party and other
42,873
41,060
Direct
321,302
337,273
Total cost of revenue
364,175
378,333
Gross profit
309,451
320,102
Operating expenses:
Marketing
86,342
87,295
Selling, general and administrative
232,046
262,978
Restructuring charges
2,731
11,513
Acquisition-related expense (benefit), net
12
3,464
Total operating expenses
321,131
365,250
Income (loss) from operations
(11,680 )
(45,148 )
Other income (expense), net
(4,602 )
2,618
Income (loss) from continuing operations before provision
(16,282 )
(42,530 )
(benefit) for income taxes
Provision (benefit) for income taxes
4,587
1,009
Income (loss) from continuing operations
(20,869 )
(43,539 )
Income (loss) from discontinued operations, net of tax
487
(2,057 )
Net income (loss)
(20,382 )
(45,596 )
Net income attributable to noncontrolling interests
(4,032 )
(3,523 )
Net income (loss) attributable to Groupon, Inc.
$
(24,414 )
$
(49,119 )
Basic and diluted net income (loss) per share (1):
Continuing operations
$
(0.04 )
$
(0.08 )
Discontinued operations
--
--
Basic and diluted net income (loss) per share
$
(0.04 )
$
(0.08 )
Weighted average number of shares outstanding
Basic
562,195,243
582,751,678
Diluted
562,195,243
582,751,678
(1)
The structure of the Company’s common stock changed during the year
ended December 31, 2016. For additional information, refer to Note
8, Stockholders’ Equity and Compensation Arrangements, and
Note 12, Income (Loss) per Share, in the Company’s Quarterly
Report on Form 10-Q for the quarter ended March 31, 2017.
Groupon, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Three Months Ended March 31,
2017
2016
Operating activities
Net income (loss)
$
(20,382 )
$
(45,596 )
Less: Income (loss) from discontinued operations, net of tax
487
(2,057 )
Income (loss) from continuing operations
(20,869 )
(43,539 )
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
Depreciation and amortization of property, equipment and software
28,667
29,761
Amortization of acquired intangible assets
5,400
4,654
Stock-based compensation
19,701
30,093
Restructuring-related long-lived asset impairments
--
45
Deferred income taxes
(74 )
(2,310 )
(Gain) loss, net from changes in fair value of contingent
12
3,442
consideration
(Gain) loss from changes in fair value of investments
(303 )
1,100
Amortization of debt discount on convertible senior notes
2,587
--
Change in assets and liabilities, net of acquisitions and
dispositions:
Restricted cash
1,853
502
Accounts receivable
10,594
(5,763 )
Prepaid expenses and other current assets
5,380
18,939
Accounts payable
(13,184 )
(1,499 )
Accrued merchant and supplier payables
(138,238 )
(109,264 )
Accrued expenses and other current liabilities
(36,040 )
11,967
Other, net
(1,719 )
(12,905 )
Net cash provided by (used in) operating activities from continuing
(136,233 )
(74,777 )
operations
Net cash provided by (used in) operating activities from
(1,098 )
(1,948 )
discontinued operations
Net cash provided by (used in) operating activities
(137,331 )
(76,725 )
Investing activities
Purchases of property and equipment and capitalized software
(14,076 )
(19,852 )
Cash derecognized upon dispositions of subsidiaries
--
(40 )
Acquisitions of intangible assets and other investing activities
56
(786 )
Net cash provided by (used in) investing activities from continuing
(14,020 )
(20,678 )
operations
Net cash provided by (used in) investing activities from
(7,547 )
(100 )
discontinued operations
Net cash provided by (used in) investing activities
(21,567 )
(20,778 )
Financing activities
Payments for purchases of treasury stock
(27,234 )
(64,665 )
Taxes paid related to net share settlements of stock-based
(8,970 )
(4,964 )
compensation awards
Proceeds from stock option exercises and employee stock purchase plan
2,468
1,933
Distributions to noncontrolling interest holders
(3,450 )
(3,365 )
Payments of capital lease obligations
(8,067 )
(6,954 )
Other financing activities
(473 )
--
Net cash provided by (used in) financing activities
(45,726 )
(78,015 )
Effect of exchange rate changes on cash and cash equivalents,
3,756
10,668
including cash classified within current assets of discontinued
operations
Net increase (decrease) in cash and cash equivalents, including
(200,868 )
(164,850 )
cash classified within current assets of discontinued operations
Less: Net increase (decrease) in cash classified within current
(28,866 )
3,993
assets of discontinued operations
Net increase (decrease) in cash and cash equivalents
(172,002 )
(168,843 )
Cash and cash equivalents, beginning of period
862,977
824,307
Cash and cash equivalents, end of period
$
690,975
$
655,464
Groupon, Inc.
Supplemental Financial Information and Business Metrics (1)
(financial data in thousands; active customers in millions)
(unaudited)
Q1 2016
Q2 2016
Q3 2016
Q4 2016
Q1 2017
North America Segment:
Q1 2017
Gross Billings (2):
Y/Y Growth
Local
$
539,623
$
542,439
$
530,768
$
590,684
$
587,766
8.9
%
Travel
103,390
105,388
93,564
90,059
114,163
10.4
Goods
294,061
318,427
296,630
431,388
262,588
(10.7 )
Total Gross Billings
$
937,074
$
966,254
$
920,962
$ 1,112,131
$
964,517
2.9
%
Revenue:
Local
$
192,153
$
184,139
$
176,220
$
209,799
$
200,545
4.4
%
Travel
20,914
21,401
21,241
19,023
20,462
(2.2 )
Goods
287,746
311,382
285,820
421,931
252,350
(12.3 )
Total Revenue
$
500,813
$
516,922
$
483,281
$
650,753
$
473,357
(5.5 )
%
Gross Profit:
Local
$
164,018
$
158,812
$
152,873
$
185,280
$
169,342
3.2
%
Travel
15,712
16,334
17,257
15,052
15,165
(3.5 )
Goods
36,213
42,028
31,531
50,437
36,430
0.6
Total Gross Profit
$
215,943
$
217,174
$
201,661
$
250,769
$
220,937
2.3
%
Operating income (loss)
$
(41,934 )
$
(31,284 )
$
(24,471 )
$
12,246
$
(14,783 )
64.7
%
International Segment:
Q1 2017
Gross Billings:
Y/Y Growth
FX Effect (3)
Y/Y Growth excluding FX (3)
Local
$
200,141
$
196,857
$
184,068
$
221,337
$
191,219
(4.5 )
%
3.4
(1.1 ) %
Travel
63,723
56,409
58,964
60,099
53,161
(16.6 )
1.0
(15.6 )
Goods
168,748
170,019
158,965
211,963
149,079
(11.7 )
3.0
(8.7 )
Total Gross Billings
$
432,612
$
423,285
$
401,997
$
493,399
$
393,459
(9.1 )
%
2.9
(6.2 ) %
Revenue:
Local
$
68,907
$
67,956
$
64,282
$
68,900
$
63,575
(7.7 )
%
3.8
(3.9 ) %
Travel
12,451
11,640
13,524
12,141
11,002
(11.6 )
1.5
(10.1 )
Goods
116,264
127,242
125,468
173,071
125,692
8.1
3.7
11.8
Total Revenue
$
197,622
$
206,838
$
203,274
$
254,112
$
200,269
1.3
%
3.6
4.9
%
Gross Profit:
Local
$
64,221
$
62,970
$
59,257
$
63,987
$
59,194
(7.8 )
%
3.9
(3.9 ) %
Travel
11,242
10,484
12,378
11,087
10,036
(10.7 )
1.8
(8.9 )
Goods
28,696
24,749
19,972
26,063
19,284
(32.8 )
2.0
(30.8 )
Total Gross Profit
$
104,159
$
98,203
$
91,607
$
101,137
$
88,514
(15.0 )
%
3.2
(11.8 ) %
Operating income (loss)
$
(3,214 )
$
(8,469 )
$
(370 )
$
(2,749 )
$
3,103
196.5
%
Consolidated Results of Operations:
Gross Billings:
Local
$
739,764
$
739,296
$
714,836
$
812,021
$
778,985
5.3
%
0.9
6.2
%
Travel
167,113
161,797
152,528
150,158
167,324
0.1
0.4
0.5
Goods
462,809
488,446
455,595
643,351
411,667
(11.1 )
1.1
(10.0 )
Total Gross Billings
$ 1,369,686
$ 1,389,539
$ 1,322,959
$ 1,605,530
$ 1,357,976
(0.9 )
%
0.9
--
%
Revenue:
Local
$
261,060
$
252,095
$
240,502
$
278,699
$
264,120
1.2
%
1.0
2.2
%
Travel
33,365
33,041
34,765
31,164
31,464
(5.7 )
0.6
(5.1 )
Goods
404,010
438,624
411,288
595,002
378,042
(6.4 )
1.0
(5.4 )
$
698,435
$
723,760
$
686,555
$
904,865
$
673,626
(3.6 )
%
1.0
(2.6 ) %
Total Revenue
Gross Profit:
Local
$
228,239
$
221,782
$
212,130
$
249,267
$
228,536
0.1
%
1.1
1.2
%
Travel
26,954
26,818
29,635
26,139
25,201
(6.5 )
0.7
(5.8 )
Goods
64,909
66,777
51,503
76,500
55,714
(14.2 )
0.9
(13.3 )
Total Gross Profit
$
320,102
$
315,377
$
293,268
$
351,906
$
309,451
(3.3 )
%
1.0
(2.3 ) %
Operating income (loss)
$
(45,148 )
$
(39,753 )
$
(24,841 )
$
9,497
$
(11,680 )
74.1
%
Net cash provided by (used in) operating activities from continuing
$
(74,777 )
$
(51,009 )
$
(39,879 )
$
294,593
$
(136,233 )
(82.2 )
%
operations
Free Cash Flow
$
(94,629 )
$
(67,508 )
$
(52,561 )
$
275,339
$
(150,309 )
(58.8 )
%
Q1 2016
Q2 2016
Q3 2016
Q4 2016
Q1 2017
Other Metrics:
Active Customers (4)
North America
26.9
27.9
29.1
31.1
31.6
International
17.3
17.0
16.6
16.8
16.7
Total Active Customers
44.2
44.9
45.7
47.9
48.3
TTM Gross Billings / Average Active Customer
North America
$
146
$
145
$
142
$
138
$
136
International
109
105
103
102
101
Consolidated
131
129
127
124
123
TTM Gross Profit / Average Active Customer
North America
$
32
$
32
$
31
$
31
$
30
International
26
25
25
23
22
Consolidated
30
29
29
28
27
Consolidated Units
47.2
46.2
44.4
57.9
45.7
Year-over-year growth:
North America
6.0
%
5.9
%
6.4
%
3.2
%
(0.4 )
%
International
(15.6 )
(18.4 )
(18.5 )
(0.3 )
(8.7 )
Consolidated
(2.2 )
(3.2 )
(2.9 )
2.0
(3.1 )
Headcount
Sales (5)
3,068
2,893
2,695
2,626
2,624
Other
4,777
4,383
4,389
4,641
4,496
Total Headcount
7,845
7,276
7,084
7,267
7,120
(1) The financial results of the exited 11 countries are presented as
discontinued operations in the accompanying condensed consolidated
financial statements and tables. All prior period financial
information and operational metrics have been retrospectively
adjusted to reflect this presentation.
(2) Represents the total dollar value of customer purchases of goods and
services.
(3) Represents the change in financial measures that would have resulted
had average exchange rates in the reporting periods been the same as
those in effect in the prior year periods.
(4) Reflects the total number of unique user accounts who made a
purchase through one of our online marketplaces during the trailing
twelve months. North America active customers for the quarter ended
March 31, 2017 includes approximately 0.9 million incremental active
customers from the acquisition of LivingSocial, Inc.
(5) Includes merchant sales representatives, as well as sales support
personnel from our continuing operations.
Groupon, Inc.
Non-GAAP Reconciliation Schedules
(in thousands, except share and per share amounts)
(unaudited)
Adjusted EBITDA, non-GAAP earnings attributable to common
stockholders and non-GAAP earnings per share are non-GAAP
performance measures. The Company reconciles Adjusted EBITDA to the
most comparable U.S. GAAP performance measure, "Net income (loss)
from continuing operations" for the periods presented and the
Company reconciles non-GAAP earnings per share to the most
comparable U.S. GAAP performance measure, "Diluted net income (loss)
per share," for the periods presented.
The following is a quarterly reconciliation of Adjusted EBITDA to
the most comparable U.S. GAAP performance measure, "Income (loss)
from continuing operations."
Q1 2016
Q2 2016
Q3 2016
Q4 2016
Q1 2017
Income (loss) from continuing operations
$
(43,539 )
$ (48,768 )
$ (34,447 )
$
(39,455 )
$
(20,869 )
Adjustments:
Stock-based compensation (1)
27,293
34,210
25,457
22,563
19,650
Depreciation and amortization
34,415
33,916
32,897
34,681
34,067
Acquisition-related expense (benefit), net
3,464
850
(9 )
1,345
12
Restructuring charges
11,513
15,702
1,163
12,060
2,731
Gains on business dispositions
--
(9,339 )
(2,060 )
--
--
Non-operating expense (income), net
(2,618 )
11,253
7,917
54,737
4,602
Provision (benefit) for income taxes
1,009
(2,238 )
1,690
(5,779 )
4,587
Total adjustments
75,076
84,354
67,055
119,607
65,649
Adjusted EBITDA
$
31,537
$
35,586
$
32,608
$
80,152
$
44,780
(1) Represents stock-based compensation recorded within cost of revenue,
marketing expense, and selling, general and administrative expense.
Non-operating expense (income), net, includes $0.2 million, $0.2
million, $0.3 million, $0.2 million and $0.1 million of additional
stock-based compensation for the three months ended March 31, 2016,
June 30, 2016, September 30, 2016, December 31, 2016 and March 31,
2017, respectively. Restructuring charges includes $2.6 million and
$2.1 million of additional stock-based compensation for the three
months ended March 31, 2016 and June 30, 3016, respectively.
The following is a reconciliation of the Company’s annual outlook
for Adjusted EBITDA to the Company’s outlook for the most comparable
U.S. GAAP performance measure, "Income (loss) from continuing
operations."
Year Ending December 31, 2017
Expected income (loss) from continuing operations range
$(42,500) to $(17,500)
Expected adjustments:
Stock-based compensation
80,000 to 90,000
Depreciation and amortization
130,000
Restructuring charges
5,000
Non-operating expense (income), net
20,000
Provision (benefit) for income taxes
7,500 to 12,500
Total expected adjustments
$242,500 to $257,500
Expected Adjusted EBITDA range
$200,000 to $240,000
The outlook provided above does not reflect the potential impact of
any additional restructuring actions that the Company may decide to
pursue, business acquisitions or dispositions, changes in the fair
values of investments or contingent consideration, foreign currency
gains or losses or unusual or infrequently occurring items that may
occur during 2017.
The following is a reconciliation of net income (loss) attributable
to common stockholders to non-GAAP net income (loss) attributable to
common stockholders and a reconciliation of diluted net income
(loss) per share to non-GAAP net income (loss) per share for the
three months ended March 31, 2017:
Three Months Ended March 31, 2017
Net income (loss) attributable to common stockholders
$
(24,414 )
Stock-based compensation
19,701
Amortization of acquired intangible assets
5,400
Acquisition-related expense (benefit), net
12
Restructuring charges
2,731
Losses (gains), net from changes in fair value of investments
(303 )
Intercompany foreign currency losses (gains) and reclassifications
(110 )
of translation adjustments to earnings
Non-cash interest expense on convertible senior notes
2,587
Income tax effect of above adjustments
55
Income from discontinued operations, net of tax
$
(487 )
Non-GAAP net income (loss) attributable to common stockholders
$
5,172
Weighted-average shares of common stock - basic
562,195,243
Effect of dilutive securities
7,527,970
Weighted-average shares of common stock - diluted
569,723,213
Diluted net income (loss) per share
$
(0.04 )
Impact of stock-based compensation, amortization of acquired
0.05
intangible assets, acquisition-related expense (benefit), net,
intercompany foreign currency losses (gains), special charges and
credits, income from discontinued operations and related tax effects
Non-GAAP net income (loss) per share
$
0.01
Free cash flow is a non-GAAP financial measure. The following is a
reconciliation of free cash flow to the most comparable U.S. GAAP
financial measure, "Net cash provided by (used in) operating
activities from continuing operations."
Q1 2016
Q2 2016
Q3 2016
Q4 2016
Q1 2017
Net cash provided by (used in) operating activities from continuing
$
(74,777 )
$ (51,009 )
$ (39,879 )
$
294,593
$
(136,233 )
operations
Purchases of property and equipment and capitalized software from
(19,852 )
(16,499 )
(12,682 )
(19,254 )
(14,076 )
continuing operations
Free cash flow
$
(94,629 )
$ (67,508 )
$ (52,561 )
$
275,339
$
(150,309 )
Net cash provided by (used in) investing activities from continuing
$
(20,678 )
$ (18,957 )
$ (11,902 )
$
(4,049 )
$
(14,020 )
operations
Net cash provided by (used in) financing activities
$
(78,015 )
$ 169,225
$ (38,342 )
$
(67,533 )
$
(45,726 )

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Groupon, Inc.
Investor Relations
Deb Schwartz
312-999-3098
ir@groupon.com
or
Public Relations
Bill Roberts
312-459-5191