October 31, 2014 Last Updated 9:25 am

Groupon continues to grow revenue, but company remains in the red for 2014

Press Release:

CHICAGO, Ill. – October 31, 2014  — Groupon, Inc. today announced financial results for the quarter ended September 30, 2014.

“We also made significant progress in our strategy to become the leading mobile commerce destination, with double-digit growth in our North American Local business, double-digit gross margins in North American Goods and positive Adjusted EBITDA in every segment for the first time in over a year.”

“We had another record quarter, with worldwide billings increasing 39 percent and reaching their highest level ever,” said Eric Lefkofsky, CEO of Groupon. “We also made significant progress in our strategy to become the leading mobile commerce destination, with double-digit growth in our North American Local business, double-digit gross margins in North American Goods and positive Adjusted EBITDA in every segment for the first time in over a year.”

Third Quarter 2014 Summary

  • Gross billings, which reflect the total dollar value of customer purchases of goods and services, excluding applicable taxes and net of estimated refunds, increased 39% globally to $1.86 billion in the third quarter 2014, compared with $1.34 billion in the third quarter 2013. North America billings increased 16%, EMEA increased 10% and Rest of World increased 155%, driven by the first-quarter acquisition of Ticket Monster.
  • Revenue increased 27%, to $757.1 million in the third quarter 2014, compared with $595.1 million in the third quarter 2013. North America revenue increased 16%, EMEA increased 56% and Rest of World increased 26%.
  • Gross profit was $380.1 million in the third quarter 2014, compared with $359.6 million in the third quarter 2013.
  • Adjusted EBITDA, a non-GAAP financial measure, was $67.0 million in the third quarter 2014, compared with $62.3 million in the third quarter 2013, reflecting SG&A expense related to the Ticket Monster and ideel acquisitions, as well as an increase in overall marketing expense.
  • Third quarter 2014 net loss attributable to common stockholders was $21.2 million, or $0.03 per share. Earnings per share excluding stock compensation, amortization of acquired intangible assets, and acquisition-related costs of $46.1 million (or $38.7 million net of tax), a non-GAAP financial measure, was $0.03 per share.
  • Third quarter results included $18.6 million of pre-tax non-operating foreign currency losses and a $7.7 million decrease in liabilities for uncertain tax positions.
  • Operating cash flow for the trailing twelve months ended September 30, 2014 was $180.3 million. Free cash flow, a non-GAAP financial measure, was $25.4 million in the third quarter 2014, bringing free cash flow for the trailing twelve months ended September 30, 2014 to $92.9 million.
  • At the end of the quarter, Groupon had $855.2 million 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.

Highlights

  • Units: Global units, defined as vouchers and products sold before cancellations and refunds, increased 92% year-over-year to 88 million in the third quarter 2014. North America units increased 11%, EMEA units increased 30% and Rest of World units increased 316%.
  • Active deals: At the end of the third quarter 2014, on average, active deals were approximately 300,000 globally, compared with more than 240,000 at the end of the second quarter 2014. North American active deals increased to over 120,000.
  • Active customers: Active customers, or customers that have purchased a voucher or product within the last twelve months, grew 24% year-over-year, to 52.7 million as of September 30, 2014, comprising 23.5 million in North America, 14.9 million in EMEA, and 14.3 million in Rest of World.
  • Customer spend: Third quarter 2014 trailing twelve month billings per average active customer was $149, compared with $141 in the second quarter 2014.
  • Mobile: Mobile mix, as measured by transactions completed on mobile devices, remains over half of the business. Over 100 million people have now downloaded Groupon mobile apps worldwide.
  • Marketplace: The rollout of Groupon’s marketplace (“Pull”) continued to gain traction. In the third quarter 2014, approximately 10% of total traffic in North America searched, with customers who searched spending significantly more than those who did not.
  • Rest of World: Rest of World billings grew 155% in the third quarter 2014, driven by Ticket Monster. As a result of the significant growth opportunities that exist for Ticket Monster, as well as for the Asian business more broadly, the company has hired financial advisers to evaluate a range of financing and strategic alternatives for those businesses that would, if pursued, unlock shareholder value.
    Share Repurchase Program

During the third quarter 2014, Groupon repurchased 1,349,712 shares of its Class A common stock at an average price of $6.16 per share, for an aggregate purchase price of $8.3 million. Under the existing authorization, Groupon has repurchased a total of 26,087,004 shares at an average price of $7.30 per share, for an aggregate purchase price of $190.4 million. Groupon is authorized to repurchase up to an additional $109.6 million of Class A common stock under the August 2013 share repurchase authorization. The program, which is intended to partially offset dilution from employee stock grants, terminates in August 2015.

Groupon-Q3-2014

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