Groupon reports strong Q2 revenue growth, decline in net income; announces $300 million share repurchase authorization
CHICAGO–(BUSINESS WIRE)– Groupon, Inc. today announced financial results for the quarter ended June 30, 2013.
“We significantly exceeded our operating income expectations, and delivered our strongest quarter ever in North America, due in part to accelerated billings growth of 30%,” said Eric Lefkofsky, CEO of Groupon. “With two quarters on the job, I’m pleased with the progress we’ve made in such a short time. We continue to gain traction in mobile, with nearly 50% of our North American transactions coming from mobile in June. To date, more than 50 million people have downloaded Groupon apps worldwide.”
Groupon also announced today that its Board of Directors has appointed Eric Lefkofsky as CEO, and Ted Leonsis as Chairman of the Board. “The Board is encouraged by Groupon’s performance under Eric’s leadership, and we’re pleased that he has agreed to lead the company through this important stage of its evolution,” said Ted Leonsis, Chairman of Groupon.
Second Quarter 2013 Summary
Groupon changed its segment disclosures in the second quarter to separately report three segments: North America, EMEA and Rest of World, which provides a better sense of the financial profile of its regions.
Gross billings, which reflect the total dollar value of customer purchases of goods and services, excluding any applicable taxes and net of estimated refunds, increased 10% globally to $1.41 billion in the second quarter 2013, compared with $1.29 billion in the second quarter 2012. North America growth of 30% and EMEA growth of 4% was offset by a 21% decline in Rest of World.
Revenue increased 7% to $608.7 million in the second quarter 2013, compared with $568.3 million in the second quarter 2012. North America revenue growth of 45% was offset by a 24% decline in EMEA and a 26% decline in Rest of World.
Gross profit was $384.7 million in the second quarter 2013, compared with $433.2 million in the second quarter 2012.
Operating income was $27.4 million in the second quarter 2013, compared with $46.5 million in the second quarter 2012. Operating income increased $6.2 million compared with the first quarter 2013.
Operating income excluding stock compensation and acquisition-related costs, net, a non-GAAP financial measure, was $59.0 million in the second quarter 2013, compared with $71.9 million in the second quarter 2012. Operating income excluding stock compensation and acquisition-related costs, net, increased $7.9 million compared with first quarter 2013.
Adjusted EBITDA was $80.5 million in the second quarter 2013, compared with $84.7 million in the second quarter 2012.
Second quarter 2013 net loss attributable to common stockholders was $7.6 million, or $0.01 per share, including stock compensation and acquisition-related costs, net, of $31.6 million, or $21.8 million net of tax. Earnings per share excluding stock compensation and acquisition-related costs, net of tax, a non-GAAP financial measure, was $0.02 per share, including a $0.01 negative impact from foreign exchange.
Operating cash flow for the trailing twelve months ended June 30, 2013 was $159.9 million. Free cash flow, a non-GAAP financial measure, was $29.3 million in the second quarter 2013, bringing free cash flow for the trailing twelve months ended June 30, 2013 to $75.3 million.
At the end of the quarter, Groupon had $1.2 billion in cash and cash equivalents.
Definitions and reconciliations of all non-GAAP financial measures are included below in the section titled “Non-GAAP Financial Measures” and in the accompanying tables.
Second Quarter Operating Highlights
- Global units: Consolidated units, defined as vouchers and products sold before cancellations and refunds, increased 15% year-over-year to 46 million. North America units increased 45%, EMEA units decreased 3%, and Rest of World units decreased 12%.
- Active deals: At the end of the second quarter 2013, the number of active deals in North America increased to more than 54,000 on average, compared with nearly 40,000 as reported at the end of the first quarter 2013.
- Active customers: Active customers, or customers that have purchased a Groupon within the last twelve months, grew 12% year-over-year, to 42.6 million as of June 30, 2013, comprising 19.1 million in North America, 13.9 million in EMEA, and 9.6 million in Rest of World.
- Customer spend: Second quarter 2013 trailing twelve month billings per average active customer remained unchanged at $138, compared with the first quarter 2013. North America trailing twelve month billings per average active customer increased $5 compared with the first quarter 2013, from $151 to $156.
- Mobile: In June 2013, nearly 50% of North American transactions were completed on mobile devices, compared with about 30% in June 2012. More than 50 million people have now downloaded Groupon mobile apps worldwide, with more than 7.5 million people downloading them in the second quarter alone.
- Marketplace: Direct email accounted for less than 40% of North American transactions in the second quarter 2013, providing evidence that the rollout of Groupon’s marketplace (“Pull”) continues to gain momentum.
Share Repurchase Authorization
Groupon also announced today that its Board of Directors has authorized a share repurchase program. Under the program, Groupon is authorized to repurchase up to $300 million of its outstanding Class A common stock over the next 24 months. The timing and amount of any share repurchases will be determined based on market conditions, share price and other factors, and the program may be discontinued or suspended at any time. Repurchases will be made in compliance with SEC rules and other legal requirements, and may be made in part under a Rule 10b5-1 plan, which permits stock repurchases when Groupon might otherwise be precluded from doing so. The program is intended to offset the annual dilution from employee stock grants.
In the third quarter 2013, Groupon expects seasonality to impact the Local business, as people travel more frequently in the summer months. In addition, the Company anticipates continued investment in marketing initiatives to drive long-term growth. As a result, for the third quarter 2013, the Company expects revenue of between $585 million and $635 million, operating income excluding stock compensation and acquisition-related expenses of between $20 million and $40 million, and EPS excluding stock-compensation and acquisition related expenses, net of tax, of between negative $0.01 and positive $0.01. Stock compensation is expected to be approximately $30 million, or approximately $20 million net of tax. This outlook assumes no acquisitions or investments, or material changes in foreign exchange rates.
Groupon reaffirms its guidance that full year 2013 GAAP operating income will exceed $100 million.