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Online marketplace company Groupon reported better than expected first quarter earnings after the close Tuesday. $GRPN said that recent performance trends indicate the company is recovering more the Covid lockdown more quickly than expected.

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Groupon Inc Common Stock NASDAQ: GRPN Reported Earnings After Close Tuesday

($1.63) Beat ($1.91) EPS AND $374.2 Million Beat $369.10 Million Revenue Forecast

Earnings

Groupon reported for the first quarter of gross billings were $806 million, revenue was $374 million, gross profit was $201 million and Adjusted EBITDA loss was $22 million and a loss of $1.63 per share excluding some items with revenue of $374.2 million beating analysts polled by Refinitiv expected a loss of $1.91 per share on revenue of $369.1 million.

Analysts were looking for cash burn and Groupon reported it had $667 million in cash at the end of the first quarter and that recent performance trends indicate the company is recovering more quickly than expected,

 

Groupon Inc Common Stock NASDAQ: GRPN

Reaction After hours $28.35 +$1.12 (+4.11%)

 

After Closing 27.23 USD +3.06 (12.66%) on Day

 Highlights

  • Groupon had 41.8 million active customers for the trailing twelve months ended March 31, 2020.
  •  First quarter, purchasers, which are defined as a unique customer with at least one in-quarter purchase in our Local, Travel, or Goods categories, declined at a faster rate year-over-year than active customers, with purchasers down 20% year-over-year in North America and down 18% year-over-year in International.
  • The decrease in purchasers was most pronounced in March and had a correlated impact on our unit performance.
  • In March, overall traffic and Local and Travel units declined significantly from January and February, and worsened throughout the month.
  • This performance was exacerbated by the large increase in refunds requested by customers who could no longer use their vouchers due to shelter-in-place requirements
  • Consolidated marketing expense for the first quarter was $60 million, or 30% of gross profit.
  • SG&A for the first quarter was approximately $207 million, down approximately $3 million compared with the first quarter 2019.
  • First quarter SG&A does not reflect any of the payroll savings from layoffs or furloughs since those actions were initiated in the second quarter.
  • That said, as mentioned earlier, we have taken significant costs out of the business in 2020 and our phase one layoffs alone are expected to reset our SG&A cost base by more than $125 million on an annualized basis.

We are currently in consultations and negotiations with various works councils in our international geographies, which may impact the ultimate timing of recognition of certain cost savings.

Groupon Customer Trend Q1 2020 

Cash Position

We ended Q1 with $667 million in cash, which included a $150 million draw down on our revolver, and $311 million in merchant and supplier payables.

In April, we drew down an additional $50 million on our revolver, which provides us with further liquidity and financial flexibility to navigate the impacts of COVID-19. While we typically see a seasonal step down in our cash balance in the first quarter given the timing of our customer and merchant cash cycle, this step down was exacerbated by the sharp decline in sales and higher refunds due to COVID-19.

  • Since the end of March, we have made progress on three near-term priorities:
  • • Preserving cash and reducing our cost structure;
  • • Supporting our merchants with a refreshed approach to merchandising; and
  • • Leveraging our Goods inventory to respond to changing consumer demand n total we furloughed or initiated exits of approximately 2,700 employees within our base of nearly 6,300 employees as of March 31, 2020.

Financial Outlook

While we won’t see the full financial benefit of our phase one restructuring actions in 2020, we expect the combination of layoffs and furloughs to allow us to realize approximately $100 million of in-year cost savings in 2020 and over $125 million annually starting in 2021.

Once fully implemented, we expect our multi-phase restructuring plan to deliver approximately $225 million in annualized cost savings. These were tough decisions that impacted people we care about. We believe that these changes are necessary, however, and that they have given the Groupon organization a new level of clarity around decision making, accountability and prioritization.

In addition to these payroll actions, we also took other important steps to reduce our 2020 costs and preserve cash in the near-term. These actions included continuing to sell Goods instead of fully exiting this category as quickly as possible, lowering marketing expense by significantly shortening payback thresholds and delaying brand marketing investments, and accelerating our efforts to move North America Local merchants from fixed payment terms to redemption payment terms

Groupon, Inc. (NASDAQ: GRPN) Reverse Stock Split

On June 10 2020 (“Groupon” or the “Company”) announced that the Company’s board of directors has approved a reverse stock split of the Company’s common stock at a ratio of 1-for-20, following approval of the reverse stock split by the Company’s stockholders at the Annual Meeting of Stockholders held on June 9, 2020.

The reverse stock split became effective at 5:00 p.m. Eastern time on June 10, 2020. At the effective time, every 20 issued and outstanding shares of the Company’s common stock will be converted and combined into one share of the Company’s common stock, and a proportionate reduction will be made to the Company’s number of authorized shares of common stock.

About Groupon Inc

Groupon, Inc. operates online local commerce marketplaces around the world that connect merchants to consumers by offering goods and services at a discount.

The Company operates through three segments: North America, which represents the United States and Canada; EMEA, which consists of Europe, and the Middle East and Africa, and the remainder of its international operations (Rest of World).

It offers goods and services in three primary categories: Local Deals (Local), Groupon Goods (Goods) and Groupon Getaways (Travel). Its Local category includes offerings from local and national merchants, as well as local events.

Its Goods category offers customers the ability to find deals on merchandise across various product lines, including electronics, sporting goods, jewelry, toys, household items and apparel. Through its Travel category, it features travel offers at both discounted and market rates, including hotels, airfare and package deals covering both domestic and international travel.

Source: Groupon

From The TradersCommunity News Desk

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