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Groupon's Stock Soars As Q4 Earnings Beat Estimates On Solid North America Performance

Groupon's ( GRPN ) stock rose over 20% on Thursday, after the company reported better than expected fourth quarter earnings, with both revenue and adjusted profits beating market expectations. The company also revealed in its annual report that it had paid nothing for the acquisition of its competitor LivingSocial last quarter, a company which was once valued at $6 billion.

In terms of financial results, Groupon reported 2% year-over-year (y-o-y) growth in revenue to $935 million, against market estimates of about $913 million, driven by solid growth in North America. Its adjusted earnings were 7 cents per share against consensus estimates of 2 cents per share. In terms of geographies, the company's gross billings, revenues and profits declined in international markets, owing to its strategy to focus on the North American market and move away from certain low-margin goods businesses.

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Groupon has already shut operations in 23 countries in the last 24 months, bringing down its international presence from 47 countries in January 2015 to 24 countries by the end of December 2016. By the end of the second quarter this year, Groupon aims to bring this down to 15 countries primarily in North America and Europe to further streamline its operations.

Groupon has already shut operations in 23 countries in the last 24 months, bringing down its international presence from 47 countries in January 2015 to 24 countries by the end of December 2016. By the end of the second quarter this year, Groupon aims to bring this down to 15 countries primarily in North America and Europe to further streamline its operations.

North America Results

North America, which has been the primary area of focus for the company, reported revenues of about $651 million for the quarter, an increase of 4.5% on a y-o-y basis. Gross billings for the region improved by 6% over the prior year quarter to over $1.1 billion while operating margin improved dramatically from (-0.4)% in Q4 2015 to 5.3% in Q4 2016. The renewed focus on North America led to an addition of 2 million unique customers during the quarter, including 1 million customers added from LivingSocial.

Outlook for 2017

Groupon provided its 2017 full year guidance in the recent earnings call in light of the acquisition of LivingSocial, exit from several more international markets, and cost benefits associated with the company's streamlining initiatives. Groupon expects gross profit of $1.3-1.35 billion in 2017 compared to $1.36 billion in full year 2016. It also expects adjusted EBITDA to be in the range of $20o million and $240 million, against $178 million in full year 2016.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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