Groupon Earnings: What Analysts Expect

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Groupon Inc (NASDAQ:GRPN) will report its March quarter results on Tuesday, May 6 after the market close. Wall Street expects the company’s first quarter revenues to come at $740 million with adjusted EBITDA of $35 million. The Chicago-based company’s own guidance calls for $710-$760 million in revenues and $20-$40 million in adjusted EBITDA.

Groupon’s billings growth to accelerate

Sterne Agee analysts Arvind Bhatia and Brett Strauser said in a research note that Groupon Inc (NASDAQ:GRPN) has made significant progress since last year. But the journey wasn’t without hiccups. For instance, its Q4 North America local billings growth slowed to 2% YoY, and missed expectations. Groupon’s operating losses from Rest of the World worsened to $15 million. However, the research firm believes that Groupon is an interesting turnaround story. Sterne Agee has a Buy rating on the stock with $12 price target.

Sterne Agee expects Groupon Inc (NASDAQ:GRPN) to report $725 million in revenues and $36 million in adjusted EBITDA. The research firm’s Q1 revenue estimate includes $50 million from recent acquisitions. Bhatia and Strauser expect the company’s billings to grow 9% YoY, compared to 5% during the previous quarter. International billings are expected to jump 10%, with a 9% growth in North America billings.

Groupon remains a good turnaround story

Sterne Agee noted that a turnaround like Groupon Inc (NASDAQ:GRPN) takes time and the stock could be volatile along the way. But once the turnaround is over, the company will have significant top-line growth and operating leverage. Groupon is currently shifting its business model from Push to Pull. Today, most customers check the company’s website for deals only when prompted through an email or push notification within the app.

But now Groupon Inc (NASDAQ:GRPN) is retraining its customers to check its Marketplace of more than 140,000 deals directly, even without being prompted through emails or notifications. Such customers tend to spend 50% more than the average customer who comes to the site through a Push (an email or notification). And this type of customers have a higher than average lifetime value.

Groupon Inc (NASDAQ:GRPN) shares plunged 1.55% to $6.98 at 12:33 PM EDT on Monday.

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