Groupon(GRPN) - 2024 Q1 - Quarterly Results

Q1 2024 Financial Highlights & Management Commentary First Quarter 2024 Highlights Groupon reported Q1 2024 results that surpassed the high-end of its guidance, marking the first consolidated revenue growth since 2016, while achieving its fourth consecutive quarter of positive Adjusted EBITDA and significantly narrowing its net loss Q1 2024 Key Financial Metrics | Metric | Value (USD) | | :--- | :--- | | Global Revenue | $123.1 million | | Global Billings | $381.1 million | | Net Loss | $11.5 million | | Adjusted EBITDA | $19.5 million | | Quarter-End Cash | $158.7 million | - The company reported its first consolidated revenue growth since 2016[1][2] - Dusan Senkypl has been named the permanent Chief Executive Officer[1] Management Commentary CEO Dusan Senkypl highlighted the solid start to the year, with results exceeding guidance and a return to consolidated revenue growth, expressing confidence in restarting growth and establishing Groupon as a key destination for local experiences, while acknowledging that the business is not yet operating at full capacity - CEO Dusan Senkypl stated, "Our business is back on its feet and momentum is in the right direction, but not yet firing on all cylinders"[2] - The company's mission is to become the "ultimate destination for local experiences and services"[2] Detailed Financial Performance Consolidated Performance Consolidated revenue for Q1 2024 increased by 1% year-over-year to $123.1 million, driven by a 4% rise in Local revenue, with gross profit growing 6% to $110.6 million, and profitability improving significantly as net loss narrowed to $11.5 million from $28.6 million, and Adjusted EBITDA turned positive at $19.5 million compared to a loss of $4.9 million in the prior year, aided by a substantial reduction in SG&A expenses Q1 2024 Consolidated Results vs. Q1 2023 (YoY) | Metric | Q1 2024 (USD) | Q1 2023 (USD) | Change | | :--- | :--- | :--- | :--- | | Revenue | $123.1 million | $121.6 million | +1% | | Gross Profit | $110.6 million | $104.7 million | +6% | | SG&A | $74.3 million | $101.6 million | -27% | | Net Loss | -$11.5 million | -$28.6 million | +59.8% | | Adjusted EBITDA | $19.5 million | -$4.9 million | N/A | - The decrease in SG&A was primarily driven by a reduction in payroll costs[3] - Operating cash outflow was $10.1 million, and free cash flow was negative $13.8 million[4] Segment Performance The North America segment drove the company's growth with a 6% revenue increase, while the International segment saw an 11% revenue decline, with active customers decreasing in both segments, showing a more pronounced 19% drop internationally North America The North America segment reported a 6% increase in revenue to $94.1 million, primarily driven by strong demand in the Travel category, with revenue excluding Goods growing by 8%, and gross profit increasing by 11% to $84.1 million, despite active customers declining by 6% year-over-year to 10.2 million North America Q1 2024 Performance (YoY) | Metric | Q1 2024 | Change (YoY) | | :--- | :--- | :--- | | Revenue | $94.1 million | +6% | | Revenue (ex-Goods) | $91.1 million | +8% | | Gross Profit | $84.1 million | +11% | | Active Customers | 10.2 million | -6% | - The revenue increase was primarily due to higher demand in the Travel category and favorable refund rates in the Local category[5] International The International segment faced challenges, with revenue declining 11% (12% FX-neutral) to $29.0 million due to decreased demand across all categories, gross profit falling 8% to $26.4 million, and the active customer base seeing a significant contraction, falling 19% year-over-year to 5.9 million International Q1 2024 Performance (YoY) | Metric | Q1 2024 | Change (YoY) | Change (FX-Neutral) | | :--- | :--- | :--- | :--- | | Revenue | $29.0 million | -11% | -12% | | Gross Profit | $26.4 million | -8% | -10% | | Active Customers | 5.9 million | -19% | N/A | - The decrease in revenue is primarily attributable to an overall decline in demand for Local, Goods, and Travel categories[6] Key Operating Metrics Customer and Unit Trends Total active customers continued to decline, reaching 16.1 million in Q1 2024, down from 18.2 million in the prior year, with the decline observed in both North America (down to 10.2 million) and International (down to 5.9 million) segments, and consolidated units sold also decreasing year-over-year from 10.5 million to 9.1 million Active Customers (in millions) | Region | Q1 2024 | Q1 2023 | YoY Change | | :--- | :--- | :--- | :--- | | North America | 10.2 | 10.9 | -6.4% | | International | 5.9 | 7.3 | -19.2% | | Total | 16.1 | 18.2 | -11.5% | Consolidated Units Sold (in thousands) | Category | Q1 2024 | Q1 2023 | YoY Change | | :--- | :--- | :--- | :--- | | Local | 7,990 | 8,470 | -5.7% | | Goods | 978 | 1,819 | -46.2% | | Travel | 157 | 170 | -7.6% | | Total | 9,125 | 10,459 | -12.8% | Headcount The company continued to reduce its workforce, with total headcount decreasing to 2,058 in Q1 2024 from 2,778 in Q1 2023, representing a 26% year-over-year reduction, and the sales team was reduced to 628 employees from 746 a year prior Headcount Trend | Category | Q1 2024 | Q1 2023 | YoY Change | | :--- | :--- | :--- | :--- | | Sales | 628 | 746 | -15.8% | | Other | 1,430 | 2,032 | -29.6% | | Total | 2,058 | 2,778 | -25.9% | Financial Statements Condensed Consolidated Statements of Operations For the first quarter of 2024, Groupon reported revenue of $123.1 million, a slight increase from $121.6 million in the prior-year period, with gross profit improving to $110.6 million, and a significant reduction in operating expenses, particularly SG&A, leading to income from operations of $7.4 million, a strong turnaround from an operating loss of $30.6 million in Q1 2023, resulting in a net loss attributable to Groupon, Inc. of $12.3 million, or ($0.33) per share, a notable improvement from a net loss of $29.1 million, or ($0.95) per share, a year ago Q1 2024 Statement of Operations (in thousands USD, except per share data) | Line Item | Three Months Ended Mar 31, 2024 | Three Months Ended Mar 31, 2023 | | :--- | :--- | :--- | | Revenue | $123,084 | $121,611 | | Gross Profit | $110,557 | $104,711 | | Total Operating Expenses | $103,187 | $135,276 | | Income (Loss) from Operations | $7,370 | $(30,565) | | Net Loss Attributable to Groupon, Inc. | $(12,271) | $(29,147) | | Diluted Net Loss Per Share | $(0.33) | $(0.95) | Condensed Consolidated Balance Sheets As of March 31, 2024, Groupon's balance sheet showed total assets of $580.5 million and total liabilities of $539.1 million, with cash and cash equivalents standing at $158.7 million, an increase from $141.6 million at the end of 2023, and total equity turning positive to $41.4 million from a deficit of $40.3 million at year-end 2023, primarily due to an increase in additional paid-in capital Balance Sheet Summary (in thousands USD) | Account | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $158,717 | $141,563 | | Total current assets | $276,896 | $255,583 | | Total assets | $580,526 | $570,956 | | Total current liabilities | $297,306 | $369,154 | | Total liabilities | $539,101 | $611,268 | | Total equity (deficit) | $41,425 | $(40,312) | Condensed Consolidated Statements of Cash Flows In the first quarter of 2024, Groupon used $10.1 million in cash from operating activities, a significant improvement from the $76.3 million used in the same period last year, with investing activities using $3.9 million, and financing activities providing $35.3 million in cash, largely due to $79.6 million in net proceeds from a Rights Offering, which offset the repayment of borrowings, resulting in a net increase in cash of $20.8 million for the quarter Q1 2024 Cash Flow Summary (in thousands USD) | Cash Flow Category | Three Months Ended Mar 31, 2024 | Three Months Ended Mar 31, 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | $(10,111) | $(76,320) | | Net cash used in investing activities | $(3,931) | $(9,013) | | Net cash provided by (used in) financing activities | $35,341 | $(29,197) | | Net increase (decrease) in cash | $20,805 | $(114,678) | - Financing activities included $79.6 million in proceeds from a Rights Offering, net of issuance costs[26] Non-GAAP Financial Measures & Reconciliations Explanation of Non-GAAP Measures Groupon utilizes several non-GAAP financial measures, including Adjusted EBITDA and free cash flow, to provide investors with management's perspective on the company's core operating performance, excluding items such as stock-based compensation, depreciation and amortization, certain non-operating items, and special charges like restructuring costs, believing these metrics facilitate historical and peer comparisons but are not a substitute for U.S. GAAP reporting - Key non-GAAP measures provided include Foreign currency exchange rate neutral operating results, Adjusted EBITDA, and free cash flow[8][9] - Adjusted EBITDA is defined as Net income (loss) excluding income taxes, interest, depreciation and amortization, stock-based compensation, and other special charges[12] - Free cash flow is defined as Net cash from operating activities less purchases of property, equipment, and capitalized software[15] Adjusted EBITDA Reconciliation For Q1 2024, Groupon reported a positive Adjusted EBITDA of $19.5 million, reconciled from a net loss of $11.5 million by adding back items such as stock-based compensation ($2.4 million), depreciation & amortization ($9.7 million), net other expense ($12.7 million), and provision for income taxes ($6.2 million), marking a significant improvement from the negative $4.9 million Adjusted EBITDA in Q1 2023 Reconciliation of Net Loss to Adjusted EBITDA (in thousands USD) | Line Item | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net income (loss) | $(11,506) | $(28,613) | | Stock-based compensation | 2,374 | 2,363 | | Depreciation and amortization | 9,677 | 14,505 | | Restructuring and related charges | 96 | 8,794 | | Other (income) expense, net | 12,682 | (3,070) | | Provision for income taxes | 6,194 | 1,118 | | Adjusted EBITDA | $19,517 | $(4,903) | Free Cash Flow Reconciliation Groupon's free cash flow for Q1 2024 was negative $13.8 million, calculated by taking the net cash used in operating activities of $10.1 million and subtracting $3.7 million for purchases of property, equipment, and capitalized software, representing an 83.9% improvement from the negative $85.9 million free cash flow in Q1 2023 Reconciliation to Free Cash Flow (in thousands USD) | Line Item | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | $(10,111) | $(76,320) | | Purchases of property, equipment and capitalized software | $(3,709) | $(9,544) | | Free cash flow | $(13,820) | $(85,864) |