GRPN
Groupon, INC
NASDAQ
10-Q: Groupon Reports Mixed Q2 Results Amidst Strategic Shifts and Restructuring
Sentiment:
Quarterly Report
30 July 2024 4:18 PM
Groupon's Q2 2024 results show a slight revenue decrease but improved gross profit, alongside ongoing restructuring efforts and strategic adjustments.
Worse than expected
The company's revenue decreased slightly year-over-year, indicating a worse performance than expected in terms of top-line growth.
Summary
- Groupon's Q2 2024 revenue was $124.6 million, a slight decrease from $129.1 million in Q2 2023.
- Gross profit remained relatively stable at $112.7 million, compared to $113.0 million in the same period last year.
- The company reported a net loss attributable to Groupon, Inc. of $10.0 million, an improvement from a $12.6 million loss in Q2 2023.
- Marketing expenses increased significantly to $36.5 million, up from $22.3 million in the prior year, reflecting investments in rebuilt performance marketing campaigns.
- Selling, general, and administrative expenses decreased to $77.2 million from $96.3 million year-over-year, primarily due to reduced payroll costs.
- The company completed a $80 million fully backstopped rights offering in January 2024 and used a portion of the proceeds to terminate its credit agreement.
- Groupon is undergoing restructuring, including a reduction of approximately 1,150 positions globally, with most reductions completed by March 31, 2023, and the remainder expected by the end of 2024.
- The company is exiting its local business in Italy, which is expected to incur pre-tax charges of up to $7.0 million.
Sentiment
Score: 5
Explanation: The document presents a mixed picture with some positive developments like improved net loss and cost management, but also negative aspects such as decreased revenue and increased marketing expenses. The ongoing restructuring and legal challenges add to the uncertainty, resulting in a neutral sentiment.
Positives
- The net loss attributable to Groupon, Inc. improved to $10.0 million from $12.6 million in the same quarter last year.
- Selling, general, and administrative expenses decreased to $77.2 million from $96.3 million year-over-year, indicating improved cost management.
- The company successfully completed an $80 million rights offering, strengthening its financial position.
- The termination of the credit agreement simplifies the company's financial structure.
- Gross profit remained relatively stable at $112.7 million, compared to $113.0 million in the same period last year.
Negatives
- Revenue decreased slightly to $124.6 million from $129.1 million in the same quarter last year.
- Marketing expenses increased significantly to $36.5 million, up from $22.3 million in the prior year, impacting profitability.
- The company is incurring restructuring charges, including up to $7.0 million related to exiting the local business in Italy.
- The company continues to have a material weakness in internal control over financial reporting.
- International gross billings, units and TTM active customers decreased year-over-year.
Risks
- The company faces challenges in attracting and retaining local merchants.
- Macroeconomic conditions, including inflation, may impact consumer and merchant behavior.
- The company is exposed to foreign currency exchange rate fluctuations.
- There is a material weakness in internal control over financial reporting.
- The company is subject to ongoing legal proceedings and tax assessments, including a significant tax dispute in Italy.
- The company is exploring options to retire or refinance its 2026 Notes, but there is no guarantee of success.
Future Outlook
The company is focused on growing revenue by building long-term relationships with local merchants and enhancing the customer experience. Groupon is also exploring options to retire or refinance its 2026 Notes.
Management Comments
- Management is focused on improving the marketplace offering and merchant value proposition.
- The company is focused on strengthening its product offering and rebuilding performance marketing campaigns.
- Management believes the company has sufficient liquidity to support its ongoing operational needs within the next 12 months.
Industry Context
Groupon operates in a competitive and rapidly changing environment, facing challenges from other online marketplaces and the broader macroeconomic conditions. The company's strategic shift towards local experiences reflects a broader trend in the industry towards personalized and localized offerings.
Comparison to Industry Standards
- Groupon's performance is mixed when compared to other e-commerce and marketplace companies.
- While some competitors have shown stronger revenue growth, Groupon's focus on cost management and restructuring is similar to strategies employed by other companies facing economic headwinds.
- The increase in marketing spend is a common strategy in the industry to drive customer acquisition, but the effectiveness of this spend will be key to Groupon's future success.
- The company's gross margin of around 35% is within the range of other marketplace businesses, but there is room for improvement.
- The ongoing restructuring and cost-cutting measures are similar to actions taken by other companies in the tech sector to improve profitability.
Stakeholder Impact
- Shareholders may be impacted by the company's financial performance and restructuring efforts.
- Employees are affected by the ongoing restructuring and workforce reductions.
- Merchants may be impacted by changes in the company's marketplace offering.
- Customers may be impacted by changes in the company's product offerings and services.
Next Steps
- The company will continue to execute its go-forward strategy, focusing on local experiences.
- Groupon will continue to implement its cost savings plan and restructuring efforts.
- The company will explore options to retire or refinance its 2026 Notes.
- Groupon will continue to monitor and evaluate the effectiveness of its internal control over financial reporting.
Legal Proceedings
- The company is involved in various legal proceedings, including tax disputes in Portugal and Italy.
- A Groupon subsidiary in Italy is litigating a tax dispute with the Italian tax authorities relating to a $120.4 million assessment.
- The company has an appeal lodged in the Portuguese courts relating to a Portugal VAT assessment for the periods from 2013 to 2015 of approximately $4.1 million.
Related Party Transactions
- The Rights Offering was fully backstopped by Pale Fire Capital SICAV a.s., an entity affiliated with the company's CEO and a member of the Board.
Key Dates
- March 22, 2021: Date used to calculate the cap for the capped call transactions related to the 2026 Notes.
- November 20, 2023: Record date for the $80 million fully backstopped Rights Offering.
- January 17, 2024: Expiration date for the subscription period for the Rights Offering.
- January 22, 2024: Date of the announcement of the closing of the $80 million Rights Offering.
- February 2024: Groupon prepaid $43.1 million to terminate all commitments to access further credit under the Credit Agreement.
- April 2024: Groupon S.r.l. paused the sale of local vouchers in Italy.
- May 1, 2024: Award date of the 2024 Executive PSUs.
- June 30, 2024: End of the reporting period for the Quarterly Report on Form 10-Q.
- July 9, 2024: Original date for the hearing on the second-level appeal for the Italian tax dispute, later rescheduled.
- July 2024: Groupon S.r.l.'s Board approved the exit of the local business in Italy.
- September 24, 2024: Rescheduled date for the hearing on the second-level appeal for the Italian tax dispute.
- October 22, 2024: Date by which an additional $51.9 million will be required to be posted for the Italian tax dispute if the appeal has not been resolved.
Keywords
Groupon, financial results, Q2 2024, restructuring, rights offering, marketing expenses, net loss, gross profit, credit agreement, internal control, Italy, 2026 Notes
GRPN
Groupon, INC
NASDAQ
Sector: Communication Services
Filings with Classifications
Capital raise
18 June 2025 7:29 AM
Financing Transaction Announcement
- The company is issuing $244,071,000 aggregate principal amount of new 4.875% Convertible Senior Notes due 2030 in exchange for existing notes. While it's an exchange and not a cash raise, it is a form of capital restructuring that impacts the company's debt capital.
Delay expected
17 June 2025 3:40 PM
Insider Transaction Report
- The Form 4 was filed late due to an inadvertent administrative oversight.
Delay expected
17 June 2025 3:39 PM
Insider Transaction Report
- The Form 4 filing was submitted late due to an inadvertent administrative oversight.
Delay expected
17 June 2025 3:39 PM
Insider Transaction Report
- The Form 4 was filed late due to an inadvertent administrative oversight.
Delay expected
16 June 2025 3:48 PM
Insider Transaction Report
- The Form 4 filing was submitted late due to an "inadvertent administrative oversight."
Delay expected
5 June 2025 1:29 PM
Insider Transaction Report
- The Form 4 filing itself was delayed, submitted late due to an inadvertent administrative oversight.
Worse than expected
5 June 2025 1:29 PM
Insider Transaction Report
- The Form 4 was filed late, indicating a lapse in regulatory compliance due to an inadvertent administrative oversight.
Delay expected
4 June 2025 5:36 PM
Insider Transaction Report
- The Form 4 filing was submitted late due to an inadvertent administrative oversight, as stated in the filing.
Better than expected
27 May 2025 1:31 PM
Insider Transaction Report Amendment
- The vesting of 109,250 Performance Share Units indicates that Groupon successfully met a pre-established stock price hurdle, which is a positive performance indicator for the company's stock.
Worse than expected
7 May 2025 4:11 PM
Earnings Press Release
- Global revenue decreased by 5% year-over-year, indicating a decline in overall sales performance.
- Adjusted EBITDA decreased from $19.5 million to $15.3 million, suggesting a decrease in profitability.
Worse than expected
7 May 2025 4:11 PM
Quarterly Report
- Revenue decreased from $123.08 million to $117.19 million, indicating a worse than expected performance.
- Adjusted EBITDA decreased from $19.52 million to $15.33 million, indicating a worse than expected performance.
Worse than expected
28 April 2025 4:07 PM
Proxy Statement
- The company reported a net loss of $57 million in 2024.
- The adjusted EBITDA goal for the 2024 Annual Bonus Plan remained below threshold.
Worse than expected
11 March 2025 4:13 PM
Earnings Release
- While North America Local billings showed positive growth, overall revenue, gross billings, and unit sales decreased year-over-year, and the company reported a net loss for both the quarter and the full year.
Worse than expected
11 March 2025 4:12 PM
Annual Results
- Gross billings, units, revenue, and gross profit all decreased year-over-year, indicating a decline in overall business activity.
Capital raise
19 November 2024 4:10 PM
Debt Issuance Announcement
- The document details a capital raise of $20 million through the issuance of convertible senior secured notes.
- The total issuance was $197.26 million, with the majority being an exchange of existing debt.
Capital raise
12 November 2024 4:51 PM
Quarterly Report
- The company completed an $80 million fully backstopped rights offering in January 2024.
- The company entered into exchange and subscription agreements for $197.3 million of new convertible senior secured notes due 2027.
Worse than expected
12 November 2024 4:51 PM
Quarterly Report
- The company's revenue, gross profit, and adjusted EBITDA all decreased compared to the same period last year, indicating worse than expected results.
Delay expected
12 November 2024 4:51 PM
SEC Form 4 Filing
- The Form 4 filing was submitted late due to an inadvertent administrative oversight.
Capital raise
12 November 2024 4:50 PM
Financing Announcement
- Groupon is raising $20 million in gross cash proceeds through the issuance of new 2027 convertible secured notes.
- The company is also exchanging $176.26 million of existing 2026 notes for new 2027 notes, which is a form of capital restructuring.
Better than expected
30 July 2024 4:19 PM
Quarterly Report
- The company reported a smaller net loss compared to the same quarter last year.
- The company achieved positive operating and free cash flow.
- North America local revenue grew by 7% year-over-year.
Worse than expected
30 July 2024 4:18 PM
Quarterly Report
- The company's revenue decreased slightly year-over-year, indicating a worse performance than expected in terms of top-line growth.
Better than expected
9 May 2024 4:09 PM
Quarterly Report
- The company's results were better than expected as they exceeded the high end of guidance.
- The company achieved its first consolidated revenue growth since 2016.
- Adjusted EBITDA turned positive, a significant improvement from the previous year.
Worse than expected
9 May 2024 4:06 PM
Quarterly Report
- While the net loss improved, the company still reported a loss and gross billings decreased, indicating worse than expected performance.
Capital raise
9 May 2024 4:06 PM
Quarterly Report
- The company completed an $80 million fully backstopped rights offering in January 2024.
- The rights offering was fully backstopped by Pale Fire Capital SICAV a.s.
Capital raise
7 May 2024 9:26 AM
Executive Appointment and Compensation Announcement
- The company is seeking stockholder approval to increase the number of shares available under the 2011 Incentive Plan by 7,000,000 shares.
- This increase is necessary to cover the PSU awards granted to the CEO and CFO, as well as future awards to other employees.
Capital raise
29 April 2024 5:25 PM
Proxy Statement
- The Pale Fire Parties amended and restated the Standstill Agreement to (a) modify the termination date from the earlier to occur of forty-five days following the date on which Mr.
- Senkypl shall cease to serve for any reason as Interim Chief Executive Officer or Chief Executive Officer of the Company to December 31, 2024; and (b) exclude any and all shares of common stock purchased by the Pale Fire Parties in connection with (i) their exercise of basic subscription rights prior to the expiration of the Rights Offering, (ii) fully purchasing any and all unsubscribed shares in the Rights Offering following its expiration, and (iii) the exercise of their over-subscription privileges, if applicable, from the Pale Fire Parties existing 25% beneficial ownership limitation.
Better than expected
15 March 2024 7:05 AM
Quarterly Report
- The company's Q4 results were better than expected, with positive net income and adjusted EBITDA, which is a significant improvement from previous quarters.
- The company also resolved its going concern issue, which was a major concern in previous periods.
Capital raise
15 March 2024 7:05 AM
Quarterly Report
- In January 2024, Groupon closed a fully backstopped Rights Offering that was oversubscribed and raised $80.0 million.
Worse than expected
15 March 2024 6:58 AM
Annual Results
- The document outlines numerous risks and challenges, suggesting that the company's future performance may be worse than expected.
Capital raise
14 February 2024 7:29 PM
Debt Repayment Announcement
- Groupon conducted an $80 million fully backstopped rights offering.
- The rights offering was made available to all holders of record of the company's common stock.
- The proceeds from the rights offering were used to repay debt and for general corporate purposes.
Capital raise
22 January 2024 8:30 AM
Capital Raise Announcement
- Groupon completed an $80 million rights offering.
- The offering was fully backstopped and significantly oversubscribed.
- The company issued 7,079,646 shares at $11.30 per share.
Better than expected
12 January 2024 8:41 AM
Business Update
- The company expects Q4 2023 results to be at or above the high end of guidance, indicating better than expected performance.
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