GRPN
Groupon, INC
NASDAQ
10-Q: Groupon Reports Mixed Q3 Results Amidst Restructuring Efforts
Sentiment:
Quarterly Report
12 November 2024 4:51 PM
Groupon's Q3 2024 results show a net income of $14.5 million, a significant improvement compared to a net loss of $40.8 million in the same period last year, but the company continues to navigate restructuring and market challenges.
Worse than expected
The company's revenue, gross profit, and adjusted EBITDA all decreased compared to the same period last year, indicating worse than expected results.
Capital raise
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.
Summary
- Groupon reported a net income of $14.5 million for the third quarter of 2024, a substantial turnaround from a net loss of $40.8 million in the same quarter of 2023.
- The company's revenue decreased to $114.5 million, down from $126.5 million in the prior year's third quarter.
- Gross profit also saw a decrease, coming in at $102.9 million compared to $110.7 million in Q3 2023.
- The company's operating expenses were $108.5 million, slightly down from $111.1 million in the same period last year.
- Groupon's adjusted EBITDA was $14.8 million, compared to $18.2 million in the third quarter of 2023.
- The company's free cash flow was negative $19.7 million, compared to negative $18.0 million in the same period last year.
- Groupon's gross billings decreased to $373.4 million from $418.8 million in the third quarter of 2023.
- The company's units sold decreased to 8.7 million from 10.1 million in the same period last year.
- Active customers for the trailing twelve months decreased to 15.5 million from 17.0 million in the prior year.
Sentiment
Score: 5
Explanation: The document presents a mixed picture. While there's a significant improvement in net income, revenue and other key metrics are down, and the company faces ongoing challenges. The restructuring and capital raising activities add complexity, resulting in a neutral sentiment.
Positives
- The company achieved a net income of $14.5 million in Q3 2024, a significant improvement from a net loss of $40.8 million in Q3 2023.
- The company prepaid $43.1 million to terminate its credit agreement in February 2024.
- The company's cost cutting measures as a result of the impacts of our 2022 Restructuring Plan improved cash flow from operating activities.
Negatives
- Revenue decreased to $114.5 million in Q3 2024, down from $126.5 million in Q3 2023.
- Gross profit decreased to $102.9 million in Q3 2024, compared to $110.7 million in Q3 2023.
- Adjusted EBITDA was $14.8 million in Q3 2024, compared to $18.2 million in Q3 2023.
- Free cash flow was negative $19.7 million in Q3 2024, compared to negative $18.0 million in Q3 2023.
- Gross billings decreased to $373.4 million in Q3 2024, down from $418.8 million in Q3 2023.
- Units sold decreased to 8.7 million in Q3 2024, compared to 10.1 million in Q3 2023.
- Active customers for the trailing twelve months decreased to 15.5 million from 17.0 million in the prior year.
Risks
- The company is facing challenges in attracting and retaining local merchants.
- Groupon is experiencing a decline in customer demand across its categories.
- The company is exposed to macroeconomic conditions, including inflationary pressures and supply chain challenges.
- Groupon is subject to ongoing legal proceedings and tax assessments, including a significant tax dispute in Italy.
- The company has a material weakness in its internal control over financial reporting.
- The company is exposed to foreign currency exchange rate fluctuations.
Future Outlook
The company is focused on improving its marketplace offering and merchant value proposition, enhancing the customer experience, and rebuilding its performance marketing campaigns. Groupon is also continuously considering capital markets in order to enhance its capital structure.
Management Comments
- Management is focused on improving the marketplace offering and merchant value proposition.
- Management is focused on enhancing the customer experience through inventory curation and improved convenience.
- Management is focused on rebuilding performance marketing campaigns to drive customer demand and purchase frequency.
Industry Context
Groupon's performance reflects the broader challenges faced by e-commerce companies in a competitive and rapidly changing environment, including shifts in consumer behavior and macroeconomic pressures. The company's focus on local experiences aligns with a trend towards experiential spending, but it must navigate competition from other platforms and direct merchant offerings.
Comparison to Industry Standards
- Groupon's revenue decline is consistent with some other e-commerce companies facing headwinds in the current economic climate, but the company's focus on local experiences is a differentiator.
- The company's adjusted EBITDA margin is lower than some of its peers, indicating a need for further cost optimization.
- The decrease in active customers is a concern, as it suggests a need to improve customer retention and acquisition strategies.
- The company's restructuring efforts are similar to those undertaken by other companies seeking to improve efficiency and profitability.
Stakeholder Impact
- Shareholders experienced dilution from the Rights Offering.
- Employees have been impacted by restructuring and workforce reductions.
- Merchants are affected by changes in the company's strategy and platform.
- Customers may experience changes in the availability and types of deals offered.
Next Steps
- The company will continue to execute its go-forward strategy.
- Groupon will continue to monitor the impact of macroeconomic conditions on its business.
- The company will continue to remediate its material weakness over internal control over financial reporting.
- Groupon S.r.l. intends to pursue a prompt appeal to the Italian Supreme Court regarding a tax assessment.
- Groupon S.r.l. expects a hearing on the possible stay of provisional payments to take place in early 2025.
Legal Proceedings
- Groupon is involved in various legal proceedings, including tax disputes and intellectual property claims.
- A Groupon subsidiary in Italy is litigating a tax dispute with the Italian tax authorities relating to a $125.4 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 $4.3 million.
- The company has an appeal lodged in the Portuguese courts relating to a Portugal VAT assessment for the periods from 2011 to 2012 of up to $4.6 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 determine the cap on the capped call transactions related to the 2026 Notes.
- November 20, 2023: Commencement date of the $80 million rights offering.
- December 31, 2023: End of the fiscal year 2023.
- January 17, 2024: Expiration date of the subscription period for the Rights Offering.
- January 22, 2024: Closing date of the $80 million fully backstopped Rights Offering.
- February 12, 2024: Termination date of the Credit Agreement.
- March 15, 2026: Maturity date of the 2026 Notes.
- May 1, 2024: Award date of the 2024 Executive PSUs.
- September 30, 2024: End of the third quarter of 2024.
- November 12, 2024: Expected closing date of the exchange and subscription agreements for the 2027 Notes.
Keywords
Groupon, e-commerce, marketplace, local services, deals, restructuring, financial results, Q3 2024, net income, revenue, EBITDA, gross billings, active customers, digital coupons
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."
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
5 June 2025 1:29 PM
Insider Transaction Report
- The Form 4 filing itself was delayed, submitted late 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.
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.
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.
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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