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Why Groupon Earnings Are Taking Shares to a 3-Year Low

Groupon Inc. (NASDAQ: GRPN) reported its second-quarter financial results Friday before the markets opened as $0.02 in earnings per share (EPS) on $738.4 million in revenue. That compared to consensus estimates from Thomson Reuters that call for $0.03 in EPS on revenue of $740.25 million. In the same period of the previous year, it posted EPS of $0.01 and $751.58 million in revenue.

In its outlook for the third quarter, Groupon said it expects EPS in the range of $0.00 to $0.02 and revenues between $700 million and $750 million. Consensus estimates are $0.03 in EPS on $755.88 million in revenue.

In the second quarter, gross billings increased to $1.53 billion, compared with $1.50 billion last year. Gross billings grew 2% globally, or 10% excluding the unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter.

Global units (vouchers and products sold before cancellations and refunds) increased 7% year over year to 53 million in the second quarter. During the same period, active deals on average were nearly 510,000 globally, with approximately 240,000 in North America. Both include the addition of approximately 75,000 coupons. Active customers grew 6% year over year to 48.6 million.

During the second quarter, Groupon repurchased about 19.3 million of its shares at an average price of $6.34 for an aggregate purchase price of $122.7 million. Up to $461 million remains in its repurchase program.

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In late May, Groupon announced that it had completed the sale of a controlling stake in Ticket Monster for $360 million, which included $285 million in cash.

Eric Lefkofsky, CEO of Groupon, commented on earnings:

Our marketplace transition continues to gain steam as we delivered another solid quarter. Adjusting for currency, all of our businesses in North America and abroad are now growing. Groupon remains an indispensable platform for small businesses while becoming more and more of a daily habit for customers.

At the end of the quarter, Groupon had $1.1 billion in cash and cash equivalents, compared to $1.02 billion at the end of December 2014. At the end of the second quarter, free cash flow totaled a negative $12.5 million, which brought free cash flow for the trailing 12-month period to $266.8 million.

Shares of Groupon closed Thursday down 1.7%, at $4.68 in its 52-week trading range of $4.62 to $8.43. Following the release of the earnings report, shares were initially down 7.1% at $4.35 in Friday’s early trading indications. The stock has a consensus analyst price target of $7.93.

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By Chris Lange