February 15, 2017 Last Updated 8:08 am

Groupon, fresh off acquisition of LivingSocial, ends 2016 with a net loss of $183.3 million

CHICAGO, Ill. – February 15, 2017 — Groupon, Inc. today announced financial results for the quarter and fiscal year ended December 31, 2016.

“In 2016, our concentrated focus on key strategic initiatives provided a strong foundation for Groupon going forward and resulted in a streamlined global operation, a healthier Goods business, improved customer service and strong customer acquisitions after a successful online and offline marketing strategy,” said CEO Rich Williams. “We look forward to continuing to invest in the Groupon brand and unlocking the true potential of our business as we make Groupon the daily habit in local commerce.”

Groupon’s fourth quarter and full year 2016 consolidated financial results include the results of LivingSocial’s operations for the partial period from the acquisition date of October 31, 2016 to December 31, 2016.

Fourth Quarter 2016 Summary

  • Gross Billings were $1.70 billion in the fourth quarter 2016, down slightly from $1.71 billion in the fourth quarter 2015. Gross billings were impacted by dispositions and country exits in connection with Groupon’s restructuring efforts, partially offset by the addition of LivingSocial. On a same-country, FX-neutral basis, gross billings grew 2% year-over-year. North America gross billings increased 6%, reflecting growth of new customers as well as the acquisition of LivingSocial, while EMEA declined by 9% (5% FX-neutral) and Rest of World declined by 15% (15% FX-neutral). Gross billings reflect the total dollar value of customer purchases of goods and services.
  • Revenue was $934.9 million in the fourth quarter 2016, compared with $917.2 million in the fourth quarter 2015. Revenue increased 2% globally, or 4% on a same-country, FX-neutral basis. North America revenue increased 5%, EMEA declined 2% (increased 1% FX-neutral) and Rest of World declined 12% (8% FX-neutral).
  • Gross profit was $369.9 million in the fourth quarter 2016, compared with $371.7 million in the fourth quarter 2015. North America gross profit increased 14%, EMEA declined 25% and Rest of World declined 10%.
  • Net loss from continuing operations was $50.2 million in the fourth quarter 2016, compared with $32.6 million in the fourth quarter 2015. Net loss attributable to common stockholders was $52.6 million, or $0.09 per share. Net loss was negatively impacted by non-operating losses of $40.8 million in the fourth quarter 2016 from declines in the fair value of investments, primarily attributable to Ticket Monster.
  • Non-GAAP net income attributable to common stockholders was $42.5 million, or $0.07 per share.
  • Adjusted EBITDA, a non-GAAP performance measure, was $80.6 million in the fourth quarter 2016, compared with $67.0 million in the fourth quarter 2015, reflecting execution of our streamlining initiatives.
  • Global units sold declined 0.4% year-over-year to 62.0 million, primarily driven by country exits and our restructuring efforts in international segments. Units in North America increased 3%, EMEA grew 6%, and Rest of World declined 29%. Units are defined as purchases made through our online marketplaces, before refunds and cancellations.
  • Operating cash flow was $288.7 million in the fourth quarter 2016. Free cash flow, a non-GAAP financial measure, was $269.0 million in the fourth quarter 2016.
  • Cash and cash equivalents as of December 31, 2016 were $891.8 million, and we had no outstanding borrowings under our $250.0 million revolving credit facility.

Full Year 2016 Summary

  • Gross Billings were $6.1 billion in 2016, compared with $6.3 billion in 2015. On a same-country, FX-neutral basis, gross billings grew 2% year-over-year. North America gross billings increased 6%, reflecting the contribution of new active customer cohorts, while EMEA declined by 11% (9% FX-neutral) and Rest of World declined by 24% (19% FX-neutral).
  • Revenue was $3.14 billion in 2016, compared with $3.12 billion in 2015. Revenue grew 1% globally, or 4% on a same-country, FX-neutral basis. North America revenue increased 5%, EMEA declined 5% (3% FX-neutral) and Rest of World declined 19% (11% FX-neutral).
  • Gross profit was $1.36 billion in 2016, compared with $1.39 billion in 2015. North America gross profit increased 10%, EMEA declined 19% and Rest of World declined 21%.
  • Net loss from continuing operations was $183.3 million in 2016, compared with $89.2 million in 2015. Net loss attributable to common stockholders was $194.6 million, or $0.34 per share. Net loss was negatively impacted by non-operating losses of $48.1 million in the full year from declines in the fair value of investments, primarily attributable to Ticket Monster.
  • Non-GAAP net income attributable to common stockholders was $23.0 million, or $0.04 per share.
  • Adjusted EBITDA was $178.1 million in 2016, compared with $256.8 million in 2015 and ahead of our guidance range of $150 million to $165 million, reflecting our increased marketing investments in customer acquisition.
  • Global units sold declined 3% year-over-year to 214.3 million in 2016. Units in North America increased 5%, EMEA declined 4%, and Rest of World declined 29%.
  • Operating cash flow for 2016 was $117.1 million. Free cash flow, a non-GAAP financial measure, was $48.2 million in 2016, which reflects the adverse cash flow impact of restructuring charges, country exits, and the funding of our securities litigation settlement.

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.

Fourth Quarter and Full Year 2016 Highlights

  • North America Local Billings grew 11% year-over-year in the fourth quarter 2016. North America Local Billings growth accelerated throughout 2016 reaching 11% year-over-year growth in the fourth quarter 2016. LivingSocial contributed 4 percentage points to fourth quarter 2016 year-over-year growth.
  • North America customer additions accelerated to 2.0 million in the fourth quarter 2016. North America active customers reached 31.1 million as of December 31, 2016, adding 5.2 million for 2016, which marks the highest acquisition in four years. Fourth quarter net additions were 2.0 million, with 1.0 million unique customers added from LivingSocial. Active customers represent unique user accounts that have made a purchase through one of our online marketplaces during the trailing twelve months.
  • North America gross profit increased $31.5 million year-over-year in the fourth quarter 2016. North America gross profit growth accelerated to 14% year-over-year in the fourth quarter 2016 driven by 16% growth in Local and 14% growth in Shopping. For 2016, North America gross profit increased $84.0 million to $885.5 million.
  • SG&A declined $33.5 million year-over-year in the fourth quarter 2016, on solid execution of operational streamlining initiatives. SG&A in all markets declined year-over-year in the fourth quarter 2016 as we continue to drive operational efficiency through regional shared service centers and automated processes, which we expect to not only improve our customer service but also create greater operating leverage over time. SG&A declined $126.6 million year-over-year in 2016, or $89.1 million excluding the impact of a litigation reserve recorded in 2015.

Share Repurchase

During the fourth quarter 2016, Groupon repurchased 12,397,795 shares of its common stock for an aggregate purchase price of $49.9 million. During the full year 2016, Groupon repurchased 43,227,743 shares of its common stock for an aggregate purchase price of $162.4 million. Up to $195.0 million of common stock was available for repurchase under Groupon’s share repurchase program as of December 31, 2016. The timing and amount of any share repurchases are determined based on market conditions, share price and other factors, and the program may be discontinued or suspended at any time.

Outlook

Groupon is providing its outlook for 2017, which reflects current foreign exchange rates, as well as expected marketing investments, the acquisition of LivingSocial, potential disruptions related to country exits, and cost benefits associated with our streamlining initiatives. As previously announced, Groupon expects to exit 11 countries as part of its streamline and simplify initiative, and the company expects to report these countries as discontinued operations beginning in first quarter 2017. The basis for our full year 2017 guidance is continuing operations.

  • For the full year 2017, Groupon expects gross profit to be in the range of $1.30 billion and $1.35 billion, an increase of $40 to $90 million compared to full year 2016 results for the 15 countries in our go-forward footprint on an FX-neutral basis.
  • Groupon also expects Adjusted EBITDA to be in the range of $200 million and $240 million, an increase of $16 to $56 million compared to full year 2016 results for the 15 countries in our go-forward footprint on an FX-neutral basis.

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