Groupon (GRPN) Q3 Earnings Beat, Revenues Miss Estimates

Groupon Inc. GRPN reported mixed third-quarter 2018 results. The company delivered non-GAAP earnings of 4 cents per share, which beat the Zacks Consensus Estimate by a penny. Further, the figure increased from 1 cent reported in the year-ago period.

Revenues of $592.9 million declined 7% on a year-over-year basis (6% at FX neutral), lagging the Zacks Consensus Estimate of $603 million. The year-over-year decline can primarily be attributed to lower customer traffic.

The company has been trying to reduce dependence on goods deals and is shifting focus toward local services market. This is because local services market is a high margin business while goods deals bring in high revenues but smaller margins. The transition continues to hurt the company’s revenues as reflected in third-quarter results.

Groupon, Inc. Revenue (TTM)

Groupon, Inc. Revenue (TTM) | Groupon, Inc. Quote

Quarter Details

Service revenues (48.8% of total revenues) declined 4.4% year over year to $289.2 million. Product (51.2%) revenues slumped 8.5% to $303.7 million in the same period.

Region-wise, North America revenues (60.9% of total revenues) decreased 12.8% from the year-ago quarter to $361.2 million. Meanwhile, International revenues (39.1% of total revenues) increased 5.2% year over year to $231.7 million.

Billings

In the third quarter, billings from North America were $802.6 million, down by 13.6% year over year. However, international billings increased marginally 0.2% (1.8% excluding foreign exchange effect) to $413.6 million.

North America local gross billings came in at $534.2 million, decreasing 11.9%. Local revenues of $180.1 million declined 7.2% from the year-ago quarter. Further, goods billings and revenues fell 19.7% and 18.8% to $184.4 million and $163.9 million, respectively.

International local gross billings were $209.6 million, improving 3.3% (5% excluding foreign exchange effect). Local revenues of $75.9 million grew 6.1% from the year-ago quarter (7.8% excluding foreign exchange effect). However, goods billings decreased 1.2% year over year to $157.9 million. Meanwhile, revenues increased 5.4% to $146.4 million.

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