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Groupon GRPN reported adjusted earnings of 33 cents per share in the third quarter of 2024, beating the Zacks Consensus Estimate of a loss of 25 cents by 232%. The company reported a loss of $1.31 per share in the year-ago quarter.

The company’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and missed on one occasion, delivering an average surprise of 107.77%.

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Revenues of $114.5 million missed the consensus estimate by 3.8%. The figure also decreased 9% on a year-over-year basis (down 10%, excluding the foreign exchange effect).

Region-wise, North America revenues of $86.9 million lagged the consensus mark by 3.68% and declined 9% year over year due to an increase in Local voucher redemption rates in the reported period. International revenues of $27.6 million missed the consensus mark by 4.85% and decreased 13% year over year (down 14%, excluding the foreign exchange effect) due to the exit of Local business in Italy.

Groupon, Inc. Price, Consensus and EPS Surprise

Groupon, Inc. price-consensus-eps-surprise-chart | Groupon, Inc. Quote

GRPN has lost 19.4% against the Zacks Retail-Wholesale sector’s growth of 25.4% in the year-to-date period.

GRPN’s Quarterly Details

Local revenues of $105 million missed the Zacks Consensus Estimate by 5.81% and declined 9% year over year (10% excluding the foreign exchange effect). North America Local revenues decreased 8%, while International Local revenues declined 2% year over year.

Consolidated Travel revenues of $4.3 million beat the consensus mark by 7.28% and increased 3.4% year over year. North America Travel revenues increased 13.3% year over year. International Travel revenues declined 12.7% in the reported quarter.

On a consolidated basis, Goods revenues of $5.2 million beat the consensus mark by 14.58% and declined 23.8% year over year. North America Goods revenues declined 34.5%, while International Goods revenues decreased 11.7%, excluding the foreign exchange effect, on a year-over-year basis.

GRPN’s Customer Metrics

At the end of the third quarter, Groupon had approximately 15.5 million active customers compared with 17 million at the end of the year-ago quarter. However, the metric beat the Zacks Consensus Estimate by 3.68%.

At the end of the third quarter, the company had approximately 10.2 million active customers based in North America, beating the consensus mark by 6.58% and 5.3 million active international customers, missing the consensus mark by 1.49%.

Operating Details of GRPN

In the third quarter, gross profit was $102.9 million, down 7% year over year.

Selling, general and administrative expenses fell 10.8% year over year to $71.3 million in the reported quarter. This can be attributed to a decrease in cloud costs. Marketing expenses rose 25.4% to $36.3 million.

The company reported a GAAP operating loss of $5.6 million compared with a loss of $464K in the year-ago quarter.

GRPN’s Balance Sheet & Cash Flow

Groupon exited the quarter with cash and cash equivalents of $159.7 million, up from $178.1 million as of June 30, 2024.

In the third quarter, the operating cash outflow was $16.3 million against the operating cash inflow of $15.3 million in the prior quarter.

Groupon reported a free cash outflow of $19.7 million against $10.8 million of free cash inflow reported in the previous quarter.

GRPN has penned an agreement to raise $197 million in new secured convertible debt, maturing in 2027 with a 6.25% coupon and a $30 strike price.

GRPN’s Guidance

For the fourth quarter of 2024, the company expects revenues in the band of $124-$131 million, indicating a 10-5% year-over-year decline. The Zacks Consensus Estimate for fourth-quarter 2024 revenues is pegged at $144.38 million, indicating 4.83% year-over-year growth.

Adjusted EBITDA is expected to be between $14 million and $19 million.

Groupon expects a positive free cash flow for the fourth quarter.

For 2024, the company expects revenues between $486 million and $493 million, indicating a year-over-year change in the band of (6)-(4%).

Adjusted EBITDA is expected to be between $65 million and $70 million.

Groupon expects a positive free cash flow for 2024.

GRPN’s Zacks Rank & Stocks to Consider

Groupon currently carries a Zacks Rank #3 (Hold).

Investors interested in the broader retail-wholesale sector can consider some better-ranked stocks like Booking Holdings BKNG, Amazon AMZN and Travelzoo TZOO, each of which carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

BKNG has gained 41.6% in the year-to-date period. The long-term earnings growth rate for BKNG is currently estimated at 15.68%.

Shares of Amazon have gained 38.1% in the year-to-date period. The long-term earnings growth rate for AMZN is currently expected at 20%.

Travelzoo has gained 100.7% in the year-to-date period. The long-term earnings growth rate for TZOO is currently anticipated at 8.72%.

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