GRPN
$4.73
Groupon Cl A
$.09
1.94%
Earnings Details
2nd Quarter June 2017
Wednesday, August 02, 2017 8:30:03 AM
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Summary

Groupon Cl A Beats

Groupon Cl A (GRPN) reported 2nd Quarter June 2017 earnings of $0.03 per share on revenue of $662.6 million. The consensus estimate was for breakeven results on revenue of $669.5 million. The Earnings Whisper number was $0.01 per share. Revenue fell 12.4% compared to the same quarter a year ago.

The company said it now expects 2017 Adjusted EBITDA of $215.0 million to $240.0 million. The company's previous guidance was 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
$0.03
Earnings Whisper
$0.01
Consensus Estimate
$0.00
Reported Revenue
$662.6 Mil
Revenue Estimate
$669.5 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Groupon Announces Second Quarter 2017 Results

Gross profit of $328.1 million

--Net loss from continuing operations of $5.4 million

--Adjusted EBITDA of $53.3 million

GAAP loss per share from continuing operations of $0.01; non-GAAP income per share of $0.02

Operating cash flow of $97.8 million for the trailing twelve month period; Free cash flow of $36.4 million for the trailing twelve month period

Maintains 2017 gross profit guidance of $1.30 billion to $1.35 billion and raises bottom end of 2017 Adjusted EBITDA guidance range to $215 million to $240 million

Groupon, Inc. (GRPN) today announced financial results for the quarter ended June 30, 2017.

"Local commerce continues to be a vast opportunity, and we made great progress as a leader in the space with double-digit unit and gross profit growth in North America Local," said CEO Rich Williams. "As we continue to build an amazing and voucherless customer experience and invest in our customers and merchants, we are excited about the growing strength of our local marketplace."

Second Quarter 2017 Summary

North America

North America gross profit in the second quarter 2017 increased 8% to $233.9 million from $217.2 million in the second quarter 2016 as strength in Local was partially offset by declines in Goods. In Local, gross profit increased 13% to $179.6 million driven by double digit growth in units. Health, Beauty & Wellness and Things To Do were among the top performing categories in Local. In Goods, gross profit declined 13% to $36.5 million as declines in revenue were partially offset by increases in margin.

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 second quarter 2017, North America revenue decreased 13% driven by a 30% decline in Goods direct revenue transactions, which are presented on a gross basis.

North America active customers reached 31.9 million as of June 30, 2017, adding 300 thousand net new active customers during the second quarter 2017. Gross profit per active customer was $30, flat with 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.

Customer experience investments continued to expand with voucherless and cashless beauty booking programs launching in key major markets and comprising thousands of available deals across restaurants, spas and salons.

International

International gross profit declined 4% (1% FX-neutral) in the second quarter 2017 to $94.2 million as we continue to work to turn around the business following short term disruption relating to our country exits. Gross profit increased 3% in Local on an FX-neutral basis, offset by a 3% decline in Travel and a 9% decline in Goods. We made progress across several supply, marketing, and product initiatives in the second quarter, and believe our current initiatives will enable us to turn around international in the coming quarters.

International active customers declined 300 thousand during the second quarter 2017 to 16.4 million as of June 30, 2017.

Consolidated

Gross billings were $1.36 billion in the second quarter 2017, down 2% (1% FX-neutral) from $1.39 billion in the second quarter 2016. Gross billings reflect the total dollar value of customer purchases of goods and services.

Revenue was $662.6 million in the second quarter 2017, down 8% from $723.8 million in the second quarter 2016.

Gross profit was $328.1 million in the second quarter 2017, up 4% (5% FX-neutral) from $315.4 million in the second quarter 2016.

SG&A declined 11% year-over-year to $230.2 million in the second 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 create greater operating leverage over time. We ended the second quarter 2017 with headcount of 6,661, down 615 year-over-year.

Marketing was $100.7 million in the second quarter 2017, up 13% year-over-year. We are seeing strong results from our offline campaign "Save Up to $100 a Week on What You Do Every Day," and expect to increase investments in overall marketing in the third and fourth quarters of 2017.

Net loss from continuing operations was $5.4 million in the second quarter 2017. This compares to $48.8 million in the second quarter 2016, which included $15.7 million of restructuring charges. The improvement was also impacted by non-operating foreign currency gains of $10.8 million, as compared to losses of $1.6 million in the prior period.

Net loss attributable to common stockholders was $9.3 million, or $0.02 per share. Non-GAAP net income attributable to common stockholders was $12.0 million, or $0.02 per share.

Adjusted EBITDA, a non-GAAP financial measure, was $53.3 million in the second quarter 2017, up 50% from $35.6 million in the second quarter 2016.

Global units sold declined 4% year-over-year to 44.5 million in the second quarter 2017. Units in North America declined 2% as double digit growth in Local was offset by declines in Goods, while International declined 8%. Units are defined as purchases made through our online marketplaces, before refunds and cancellations.

Operating cash flow was $97.8 million for the trailing twelve month period as of the second quarter 2017. Free cash flow, a non-GAAP financial measure, was $36.4 million for the trailing twelve month period ending June 30, 2017.

Cash and cash equivalents as of June 30, 2017 were $618.6 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 second quarter 2017, Groupon repurchased 7,185,453 shares of its common stock for an aggregate purchase price of $24.8 million. Groupon repurchased 14,522,134 shares for an aggregate purchase price of $50.9 million for the year-to-date period as of June 30, 2017. Up to $144.3 million of common stock was available for repurchase under Groupon’s share repurchase program as of June 30, 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 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 expects gross profit to be in the range of $1.30 billion to $1.35 billion, which is unchanged.

Groupon is raising the bottom end of its expected Adjusted EBITDA guidance range to $215 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. For the three months ended March 31, 2016, special charges and credits also included gains from business dispositions. 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 performance 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. However, Adjusted EBITDA is not intended to be a substitute for income (loss) from continuing operations.

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 liquidity 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 August 2, 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)
(unaudited)
June 30, 2017
December 31, 2016
Assets
Current assets:
Cash and cash equivalents
$
618,550
$
862,977
Accounts receivable, net
60,785
71,272
Prepaid expenses and other current assets
107,527
94,441
Current assets of discontinued operations
--
63,246
Total current assets
786,862
1,091,936
Property, equipment and software, net
162,577
169,452
Goodwill
282,011
274,551
Intangible assets, net
32,256
42,915
Investments (including $108,230 and $110,066 at June 30, 2017 and
141,436
141,882
December 31, 2016, respectively, at fair value)
Deferred income taxes
4,838
5,151
Other non-current assets
17,457
23,484
Non-current assets of discontinued operations
--
12,006
Total Assets
$
1,427,437
$
1,761,377
Liabilities and Equity
Current liabilities:
Accounts payable
$
18,389
$
28,551
Accrued merchant and supplier payables
606,020
770,992
Accrued expenses and other current liabilities
328,998
366,456
Current liabilities of discontinued operations
--
47,052
Total current liabilities
953,407
1,213,051
Convertible senior notes, net
184,237
178,995
Deferred income taxes
1,833
1,714
Other non-current liabilities
101,978
99,628
Non-current liabilities of discontinued operations
--
2,927
Total Liabilities
1,241,455
1,496,315
Commitments and contingencies (see Note 7)
Stockholders’ Equity
Common stock, par value $0.0001 per share, 2,010,000,000 shares
74
74
authorized, 743,577,187 shares issued and 557,359,145 shares
outstanding at June 30, 2017 and 736,531,771 shares issued and
564,835,863 shares outstanding at December 31, 2016
Additional paid-in capital
2,145,030
2,112,728
Treasury stock, at cost, 186,218,042 shares at June 30, 2017 and
(858,291 )
(807,424 )
171,695,908 shares at December 31, 2016
Accumulated deficit
(1,135,984 )
(1,099,010 )
Accumulated other comprehensive income (loss)
34,358
58,052
Total Groupon, Inc. Stockholders’ Equity
185,187
264,420
Noncontrolling interests
795
642
Total Equity
185,982
265,062
Total Liabilities and Equity
$
1,427,437
$
1,761,377
Groupon, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except share and per share amounts)
(unaudited)
Three Months Ended June 30,
Six Months Ended June 30,
2017
2016
2017
2016
Revenue:
Third-party and other
$
315,854
$
294,576
$
617,426
$
604,205
Direct
346,765
429,184
718,819
817,990
Total revenue
662,619
723,760
1,336,245
1,422,195
Cost of revenue:
Third-party and other
38,478
38,109
81,351
79,169
Direct
296,074
370,274
617,376
707,547
Total cost of revenue
334,552
408,383
698,727
786,716
Gross profit
328,067
315,377
637,518
635,479
Operating expenses:
Marketing
100,658
89,180
187,000
176,475
Selling, general and administrative
230,187
258,737
462,233
521,715
Restructuring charges
4,584
15,702
7,315
27,215
Gains on business dispositions
--
(9,339 )
--
(9,339 )
Acquisition-related expense (benefit), net
36
850
48
4,314
Total operating expenses
335,465
355,130
656,596
720,380
Income (loss) from operations
(7,398 )
(39,753 )
(19,078 )
(84,901 )
Other income (expense), net
5,878
(11,253 )
1,276
(8,635 )
Income (loss) from continuing operations before provision
(1,520 )
(51,006 )
(17,802 )
(93,536 )
(benefit) for income taxes
Provision (benefit) for income taxes
3,883
(2,238 )
8,470
(1,229 )
Income (loss) from continuing operations
(5,403 )
(48,768 )
(26,272 )
(92,307 )
Income (loss) from discontinued operations, net of tax
(1,376 )
(2,963 )
(889 )
(5,020 )
Net income (loss)
(6,779 )
(51,731 )
(27,161 )
(97,327 )
Net income attributable to noncontrolling interests
(2,547 )
(3,173 )
(6,579 )
(6,696 )
Net income (loss) attributable to Groupon, Inc.
$
(9,326 )
$
(54,904 )
$
(33,740 )
$
(104,023 )
Basic and diluted net income (loss) per share (1):
Continuing operations
$
(0.01 )
$
(0.09 )
$
(0.06 )
$
(0.17 )
Discontinued operations
(0.01 )
(0.01 )
--
(0.01 )
Basic and diluted net income (loss) per share
$
(0.02 )
$
(0.10 )
$
(0.06 )
$
(0.18 )
Weighted average number of shares outstanding (1)
Basic
559,762,180
576,903,004
560,978,712
579,827,341
Diluted
559,762,180
576,903,004
560,978,712
579,827,341
(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 June 30, 2017.
Groupon, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Three Months Ended June 30,
Six Months Ended June 30,
2017
2016
2017
2016
Operating activities
Net income (loss)
$
(6,779 )
$
(51,731 )
$
(27,161 )
$
(97,327 )
Less: Income (loss) from discontinued operations, net of tax
(1,376 )
(2,963 )
(889 )
(5,020 )
Income (loss) from continuing operations
(5,403 )
(48,768 )
(26,272 )
(92,307 )
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
Depreciation and amortization of property, equipment and software
28,496
29,335
57,163
59,096
Amortization of acquired intangible assets
6,183
4,581
11,583
9,235
Stock-based compensation
21,440
36,510
41,141
66,603
Restructuring-related long-lived asset impairments
--
--
--
45
Gains on business dispositions
--
(9,339 )
--
(9,339 )
Deferred income taxes
833
(2,838 )
759
(5,148 )
(Gain) loss, net from changes in fair value of contingent
36
850
48
4,292
consideration
(Gain) loss from changes in fair value of investments
1,448
4,607
1,145
5,707
Amortization of debt discount on convertible senior notes
2,655
2,396
5,242
2,396
Change in assets and liabilities, net of acquisitions and
dispositions:
Restricted cash
(1,305 )
(1,197 )
548
(695 )
Accounts receivable
5,635
5,263
16,229
(500 )
Prepaid expenses and other current assets
(16,519 )
(55,839 )
(11,139 )
(36,900 )
Accounts payable
2,461
(4,194 )
(10,723 )
(5,693 )
Accrued merchant and supplier payables
(44,716 )
(11,365 )
(182,954 )
(120,629 )
Accrued expenses and other current liabilities
(5,451 )
(7,012 )
(41,491 )
4,955
Other, net
(16,488 )
6,001
(18,207 )
(6,904 )
Net cash provided by (used in) operating activities from continuing
(20,695 )
(51,009 )
(156,928 )
(125,786 )
operations
Net cash provided by (used in) operating activities from
(1,097 )
(3,001 )
(2,195 )
(4,949 )
discontinued operations
Net cash provided by (used in) operating activities
(21,792 )
(54,010 )
(159,123 )
(130,735 )
Investing activities
Purchases of property and equipment and capitalized software
(15,385 )
(16,499 )
(29,461 )
(36,351 )
Cash derecognized upon dispositions of subsidiaries
--
(352 )
--
(352 )
Proceeds from maturity of investment
1,843
--
1,843
--
Acquisitions of businesses, net of acquired cash
--
(900 )
--
(940 )
Acquisitions of intangible assets and other investing activities
(240 )
(1,206 )
(184 )
(1,992 )
Net cash provided by (used in) investing activities from continuing
(13,782 )
(18,957 )
(27,802 )
(39,635 )
operations
Net cash provided by (used in) investing activities from
(2,001 )
104
(9,548 )
4
discontinued operations
Net cash provided by (used in) investing activities
(15,783 )
(18,853 )
(37,350 )
(39,631 )
Financing activities
Proceeds from issuance of convertible senior notes
--
250,000
--
250,000
Issuance costs for convertible senior notes and revolving credit
--
(8,097 )
--
(8,097 )
agreement
Purchase of convertible note hedges
--
(59,163 )
--
(59,163 )
Proceeds from issuance of warrants
--
35,495
--
35,495
Payments for purchases of treasury stock
(24,279 )
(25,784 )
(51,513 )
(90,449 )
Taxes paid related to net share settlements of stock-based
(6,386 )
(11,571 )
(15,356 )
(16,535 )
compensation awards
Proceeds from stock option exercises and employee stock purchase plan
9
114
2,477
2,047
Distributions to noncontrolling interest holders
(2,976 )
(3,762 )
(6,426 )
(7,127 )
Payment of contingent consideration related to acquisitions
(5,689 )
(285 )
(5,689 )
(285 )
Payments of capital lease obligations
(8,603 )
(7,722 )
(16,670 )
(14,676 )
Other financing activities
--
--
(473 )
--
Net cash provided by (used in) financing activities
(47,924 )
169,225
(93,650 )
91,210
Effect of exchange rate changes on cash and cash equivalents,
13,074
(4,742 )
16,830
5,926
including cash classified within current assets of discontinued
operations
Net increase (decrease) in cash and cash equivalents, including
(72,425 )
91,620
(273,293 )
(73,230 )
cash classified within current assets of discontinued operations
Less: Net increase (decrease) in cash classified within current
--
(2,591 )
(28,866 )
1,402
assets of discontinued operations
Net increase (decrease) in cash and cash equivalents
(72,425 )
94,211
(244,427 )
(74,632 )
Cash and cash equivalents, beginning of period
690,975
655,464
862,977
824,307
Cash and cash equivalents, end of period
$
618,550
$
749,675
$
618,550
$
749,675
Groupon, Inc.
Supplemental Financial Information and Business Metrics (1)
(financial data in thousands; active customers in millions)
(unaudited)
Q2 2016
Q3 2016
Q4 2016
Q1 2017
Q2 2017
North America Segment:
Q2 2017
Gross Billings (2):
Y/Y Growth
Local
$
542,439
$
530,768
$
590,684
$
587,766
$
615,833
13.5
%
Travel
105,388
93,564
90,059
114,163
112,670
6.9
Goods
318,427
296,630
431,388
262,588
245,924
(22.8 )
Total Gross Billings
$
966,254
$
920,962
$ 1,112,131
$
964,517
$
974,427
0.8
%
Revenue:
Local
$
184,139
$
176,223
$
209,799
$
200,545
$
207,534
12.7
%
Travel
21,401
21,239
19,023
20,462
22,320
4.3
Goods
311,382
285,819
421,931
252,350
222,058
(28.7 )
Total Revenue
$
516,922
$
483,281
$
650,753
$
473,357
$
451,912
(12.6 )
%
Gross Profit:
Local
$
158,812
$
152,873
$
185,280
$
169,342
$
179,609
13.1
%
Travel
16,334
17,257
15,052
15,165
17,755
8.7
Goods
42,028
31,531
50,437
36,430
36,496
(13.2 )
Total Gross Profit
$
217,174
$
201,661
$
250,769
$
220,937
$
233,860
7.7
%
Operating income (loss)
$
(31,284 )
$
(24,470 )
$
12,265
$
(14,783 )
$
(12,033 )
61.5
%
International Segment:
Q2 2017
Gross Billings:
Y/Y Growth
FX Effect (3)
Y/Y Growth excluding FX (3)
Local
$
196,857
$
184,068
$
221,337
$
191,219
$
189,408
(3.8 )
%
3.9
0.1
%
Travel
56,409
58,964
60,099
53,161
45,981
(18.5 )
1.8
(16.7 )
Goods
170,019
158,965
211,963
149,079
154,417
(9.2 )
2.5
(6.7 )
Total Gross Billings
$
423,285
$
401,997
$
493,399
$
393,459
$
389,806
(7.9 )
%
3.0
(4.9 )
%
Revenue:
Local
$
67,956
$
64,282
$
68,900
$
63,575
$
66,108
(2.7 )
%
4.2
1.5
%
Travel
11,640
13,524
12,141
11,002
10,796
(7.3 )
1.9
(5.4 )
Goods
127,242
125,468
173,071
125,692
133,803
5.2
2.8
8.0
Total Revenue
$
206,838
$
203,274
$
254,112
$
200,269
$
210,707
1.9
%
3.2
5.1
%
Gross Profit:
Local
$
62,970
$
59,257
$
63,987
$
59,194
$
62,303
(1.1 )
%
4.3
3.2
%
Travel
10,484
12,378
11,087
10,036
9,996
(4.7 )
1.9
(2.8 )
Goods
24,749
19,972
26,063
19,284
21,908
(11.5 )
2.5
(9.0 )
Total Gross Profit
$
98,203
$
91,607
$
101,137
$
88,514
$
94,207
(4.1 )
%
3.6
(0.5 )
%
Operating income (loss)
$
(8,469 )
$
(370 )
$
(2,762 )
$
3,103
$
4,635
154.7
%
Consolidated Results of Operations:
Gross Billings:
Local
$
739,296
$
714,836
$
812,021
$
778,985
$
805,241
8.9
%
1.1
10.0
%
Travel
161,797
152,528
150,158
167,324
158,651
(1.9 )
0.6
(1.3 )
Goods
488,446
455,595
643,351
411,667
400,341
(18.0 )
0.8
(17.2 )
Total Gross Billings
$ 1,389,539
$ 1,322,959
$ 1,605,530
$ 1,357,976
$ 1,364,233
(1.8 )
%
0.9
(0.9 )
%
Revenue:
Local
$
252,095
$
240,505
$
278,699
$
264,120
$
273,642
8.5
%
1.2
9.7
%
Travel
33,041
34,763
31,164
31,464
33,116
0.2
0.7
0.9
Goods
438,624
411,287
595,002
378,042
355,861
(18.9 )
0.9
(18.0 )
Total Revenue
$
723,760
$
686,555
$
904,865
$
673,626
$
662,619
(8.4 )
%
0.9
(7.5 )
%
Gross Profit:
Local
$
221,782
$
212,130
$
249,267
$
228,536
$
241,912
9.1
%
1.2
10.3
%
Travel
26,818
29,635
26,139
25,201
27,751
3.5
0.7
4.2
Goods
66,777
51,503
76,500
55,714
58,404
(12.5 )
0.9
(11.6 )
Total Gross Profit
$
315,377
$
293,268
$
351,906
$
309,451
$
328,067
4.0
%
1.2
5.2
%
Operating income (loss)
$
(39,753 )
$
(24,840 )
$
9,503
$
(11,680 )
$
(7,398 )
81.4
%
Net cash provided by (used in) operating activities from continuing
$
(51,009 )
$
(39,879 )
$
294,593
$
(136,233 )
$
(20,695 )
59.4
%
operations
Free Cash Flow
$
(67,508 )
$
(52,561 )
$
275,339
$
(150,309 )
$
(36,080 )
46.6
%
Q2 2016
Q3 2016
Q4 2016
Q1 2017
Q2 2017
Other Metrics:
Active Customers (4)
North America
27.9
29.1
31.1
31.6
31.9
International
17.0
16.6
16.8
16.7
16.4
Total Active Customers
44.9
45.7
47.9
48.3
48.3
TTM Gross Billings / Average Active Customer
North America
$
145
$
142
$
138
$
136
$
133
International
105
103
102
101
101
Consolidated
129
127
124
123
121
TTM Gross Profit / Average Active Customer
North America
$
32
$
31
$
31
$
30
$
30
International
25
25
23
22
23
Consolidated
29
29
28
27
28
Consolidated Units
46.2
44.4
57.9
45.7
44.5
Year-over-year unit growth:
North America
5.9
%
6.4
%
3.2
%
(0.4 )
%
(1.9 )
%
International
(18.4 )
(18.5 )
(0.3 )
(8.7 )
(7.8 )
Consolidated
(3.2 )
(2.9 )
2.0
(3.1 )
(3.8 )
Headcount (5)
Sales (6)
2,893
2,695
2,626
2,624
2,485
Other
4,383
4,389
4,641
4,496
4,176
Total Headcount
7,276
7,084
7,267
7,120
6,661
(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
June 30, 2017 includes approximately 0.7 million incremental active
customers from the acquisition of LivingSocial, Inc.
(5)
Prior period headcount amounts exclude employees of discontinued
operations. Including those employees, our headcount decreased by
1,944 employees, or 23%, year-over-year in the second quarter of
2017, from 8,605 total employees in the prior year period.
(6)
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."
Q2 2016
Q3 2016
Q4 2016
Q1 2017
Q2 2017
Income (loss) from continuing operations
$
(48,768 )
$
(34,447 )
$
(39,455 )
$
(20,869 )
$
(5,403 )
Adjustments:
Stock-based compensation (1)
34,210
25,457
22,563
19,650
21,392
Depreciation and amortization
33,916
32,897
34,681
34,067
34,679
Acquisition-related expense (benefit), net
850
(9 )
1,345
12
36
Restructuring charges
15,702
1,163
12,060
2,731
4,584
Gains on business dispositions
(9,339 )
(2,060 )
--
--
--
Non-operating expense (income), net
11,253
7,917
54,737
4,602
(5,878 )
Provision (benefit) for income taxes
(2,238 )
1,690
(5,779 )
4,587
3,883
Total adjustments
84,354
67,055
119,607
65,649
58,696
Adjusted EBITDA
$
35,586
$
32,608
$
80,152
$
44,780
$
53,293
(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, $0.3
million, $0.2 million, $0.1 million and $0.0 million of additional
stock-based compensation for the three months ended June 30, 2016,
September 30, 2016, December 31, 2016, March 31, 2017, and June 30,
2017, respectively. Restructuring charges include $2.1 million of
additional stock-based compensation for the three months ended June
30, 2016.
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
$(17,500) to $(7,500)
Expected adjustments:
Stock-based compensation
80,000 to 90,000
Depreciation and amortization
135,000
Restructuring charges
7,500
Non-operating expense (income), net
1,000
Provision (benefit) for income taxes
9,000 to 14,000
Total expected adjustments
$232,500 to $247,500
Expected Adjusted EBITDA range
$215,000 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 or asset 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 the remainder
of 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 and six months ended June 30, 2017:
Three Months Ended
Six Months Ended
June 30, 2017
June 30, 2017
Net income (loss) attributable to common stockholders
$
(9,326 )
$
(33,740 )
Stock-based compensation
21,440
41,141
Amortization of acquired intangible assets
6,183
11,583
Acquisition-related expense (benefit), net
36
48
Restructuring charges
4,584
7,315
Losses (gains), net from changes in fair value of investments
1,448
1,145
Intercompany foreign currency losses (gains) and reclassifications
(10,112 )
(10,222 )
of translation adjustments to earnings
Non-cash interest expense on convertible senior notes
2,655
5,242
Income tax effect of above adjustments
(6,329 )
(6,274 )
Loss from discontinued operations, net of tax
1,376
889
Non-GAAP net income (loss) attributable to common stockholders
$
11,955
$
17,127
Weighted-average shares of common stock - basic
559,762,180
560,978,712
Effect of dilutive securities
6,821,360
7,152,421
Weighted-average shares of common stock - diluted
566,583,540
568,131,133
Diluted net income (loss) per share
$
(0.02 )
$
(0.06 )
Impact of stock-based compensation, amortization of acquired
0.04
0.09
intangible assets, acquisition-related expense (benefit), net,
intercompany foreign currency losses (gains), special charges and
credits, loss from discontinued operations and related tax effects
Non-GAAP net income (loss) per share
$
0.02
$
0.03
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."
Q2 2016
Q3 2016
Q4 2016
Q1 2017
Q2 2017
Net cash provided by (used in) operating activities from continuing
$
(51,009 )
$
(39,879 )
$
294,593
$
(136,233 )
$
(20,695 )
operations
Purchases of property and equipment and capitalized software from
(16,499 )
(12,682 )
(19,254 )
(14,076 )
(15,385 )
continuing operations
Free cash flow
$
(67,508 )
$
(52,561 )
$
275,339
$
(150,309 )
$
(36,080 )
Net cash provided by (used in) investing activities from continuing
$
(18,957 )
$
(11,902 )
$
(4,049 )
$
(14,020 )
$
(13,782 )
operations
Net cash provided by (used in) financing activities
$
169,225
$
(38,342 )
$
(67,533 )
$
(45,726 )
$
(47,924 )

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