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Here's Why Groupon is Skyrocketing 22% After Earnings

On Wednesday, shares of e-commerce company Groupon GRPN are skyrocketing, up over 22% in mid-morning trading after it reported strong fourth-quarter fiscal 2016 financial results.

Groupon, known for its daily deals, reported earnings per share of three cents, beating the Zacks Consensus Estimate of a loss of two cents per share. Investors should note this number excludes 12 cents from non-recurring items. Net loss from continuing operations was $50.2 million, compared with $32.6 million in the prior-year period.

The biggest star of Groupon's earnings report was its Q4 sales. Revenues came in at $934.9 million, which also beat our consensus estimate of $910 million and increased 2% globally. North America revenue increased 5%, EMEA declined 2%, and Rest of World decreased 12%.

Gross billings were $1.70 billion in the fourth quarter, down slightly from the year-ago period. Gross billings were impacted by dispositions and country exits related to Groupon's restructuring efforts, partially offset by the addition of LivingSocial. North American gross billings increased 6%, reflecting growth in new customers, while EMEA declined by 9% and Rest of World declined by 15%.

"In 2016, our concentrated focus on key strategic initiatives provided a strong foundation for Groupon going forward and resulted in a streamlined global operation, a healthier Goods business, improved customer service and strong customer acquisitions after a successful online and offline marketing strategy," said CEO Rich Williams.

Looking ahead to 2017, Groupon expects gross profit to be in the range of $1.30 billion to $1.35 billion and adjusted EBITDA in the range of $200 million to $240 million. The company also expects to exit 11 countries as part of its streamline and simplify initiative, and Groupon expects to report these countries as discontinued operations beginning in Q1.

Currently, GRPN is a #3 (Hold) on the Zacks Rank, and is up almost 14% year-to-date.

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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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