Groupon Inc Shares Tank Despite Earnings Beat, Increased Outlook

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Groupon released its third quarter earnings results after closing bell tonight, posting non-GAAP net losses of 1 cent per share on $720.5 million in revenue. Analysts had been expecting losses of 2 cents per share on $710.47 million in revenue.

Groupon’s billings decline

Groupon’s gross billings declined 2% to $1.43 billion as a result of dispositions and country exits as the company continues to restructure. Net losses were $35.8 million, while GAAP losses per share were 7 cents, compared to last year’s GAAP losses of 4 cents per share. Gross profits fell to $314.1 million from $328.9 million last year. Adjusted EBITDA declined to $32.1 million from $56.3 million in the year-ago quarter. Global units sold fell 5% year over year to 49 million as the company exited countries. North America Local billings increased 10%, while Groupon added almost 1.2 million active customers in North America.

“Our strategy continues to deliver results with double-digit growth in North America local billings and our highest quarter for customer acquisition in over three years,” Groupon Chief Executive Rich Williams said in a statement. “We are looking forward to a strong finish to the year and further progress on our mission to make Groupon a daily habit for consumers.”

Wedbush analysts had upgraded Groupon to Outperform and raised their price target to $6.50 from $4.50 per share ahead of tonight’s earnings report. They were expecting an upside surprise due to accelerating growth in traffic to the site and an improving mix of deal inventory. They also said there was a “large valuation discrepancy” between the company and its Internet peers, and they expected the gap to close after tonight’s earnings report was released.

Groupon raises revenue outlook

Groupon management increased their revenue guidance range to between $3.075 billion and $3.15 billion for the full year. Consensus stands at around $3.1 billion. They also narrowed their full-year outlook for adjusted EBITDA to between $150 million and $165 million.

The company also entered into an agreement to acquire LivingSocial; the deal is expected to close by early November.

The company’s stock plunged by more than 6% in after-hours trades, falling as low as $4.84 per share before bouncing.

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