Groupon Q4 Earnings Analysis Groupon Reports Q4 Earnings: Exceeds Expectations Amid Revenue Decline

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By Ronald Tech

Groupon GRPN demonstrated resilience in its fourth-quarter 2023 performance, surpassing expectations with a non-GAAP earnings per share of 30 cents. This achievement marked a significant turnaround from the year-ago quarter, where the company reported a non-GAAP loss of 38 cents per share.

The revenue figure of $137.72 million, although slightly down by 7% year-over-year, managed to outstrip the consensus estimate of $135 million. Notably, North America revenues stood at $99.9 million, beating expectations by 2.9%, despite a 6% decline compared to the previous year. Similarly, international revenues of $37.8 million exceeded estimates by 8.3%, despite a 10% year-over-year drop.

Quarterly Performance Insights

Local revenues were reported at $123.6 million, surpassing the projections by 6.3%. However, this segment saw a decline of 2.8% year-over-year. On a regional breakdown, North America Local revenues fell by 2.8%, while International Local revenues dropped by 2.9%.

The Consolidated Travel revenues coming in at $5.4 million missed estimates by 8.1% and registered an 8.3% decrease year-over-year. While North America Travel revenues saw a modest 0.4% increase, International Travel revenues faced a significant downturn of 21.4% in the quarter.

Goods revenues totaled $8.7 million, falling short of expectations by 11.4% and witnessing a substantial 42.1% decline compared to the previous year. Both North America and International Goods revenues experienced similar declines, standing at 42.4% and 44.8%, respectively, excluding the foreign exchange effect.

Customer Metrics & Financial Health

At the close of the fourth quarter, Groupon boasted approximately 16.5 million active customers, surpassing the Zacks Consensus Estimate by 6.1%. However, this figure was lower than the 18.8 million active customers at the end of the year-ago period. Notably, North America reported approximately 10.3 million active customers, exceeding expectations by 14.1%, whereas International active customers stood at 6.2 million, missing estimates by 4.8%.

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In terms of financials, the company reported $122.3 million in gross profit for the quarter, reflecting a 5% decline year-over-year. Selling, general, and administrative expenses reduced significantly by 35% to $72.5 million, while marketing expenses saw an 18.8% decrease to $34.5 million. Groupon showed strong positive movement in its GAAP operating income, reaching $17.65 million compared to a loss of $32.8 million in the previous year.

Future Expectations & Market Analysis

Looking ahead, Groupon anticipates first-quarter 2024 revenues between $113 million and $118 million, hinting at a 3-7% year-over-year decline. Adjusted EBITDA is likely to range from $7 million to $12 million, with expectations of a free cash outflow during the quarter.

For the full year 2024, revenue projections range from $489 million to $515 million, implying a year-over-year change in the band of (5%)-0%. Adjusted EBITDA is forecasted to fall between $80 million and $100 million, accompanied by positive free cash flow for the year.

In the face of these projections, it is imperative for investors to weigh Groupon’s performance against industry peers. While Groupon currently holds a Zacks Rank #3 (Hold), some notable stocks in the retail-wholesale sector include American Eagle Outfitters, eBay, and Amazon, offering varying growth potentials as per their Zacks ranks.

American Eagle Outfitters, for instance, demonstrates promising growth with a Zacks Rank #1 (Strong Buy) and a solid year-to-date performance. Similarly, eBay and Amazon have shown positive momentum this year with Zacks Rank #2 (Buy) each.

Through a comprehensive analysis of the market landscape, investors can gauge the strategic positioning of Groupon amidst evolving industry dynamics, thereby making informed decisions to navigate the challenging terrain.