Quantcast

Groupon Announces Q3 Earnings, Ticket Monster Acquisition

Get the WebProNews Newsletter:
Groupon Announces Q3 Earnings, Ticket Monster Acquisition
[ Finance]

Groupon just released its earnings report for the third quarter, and announced an agreement to acquire Ticket Monster from its rival LivingSocial for $260 million cash and stock.

Revenue was up 5% year over year at $595.1 million. Gross profit was down to $359.6 million compared to $386.8 million for the same quarter last year.

“Our Local business showed continued strength in the quarter, particularly in North America,” said Eric Lefkofsky, CEO of Groupon. “Mobile adoption continued to increase in Q3, reflected in our record 9 million app downloads. We’re pleased with our progress, but we still have work to do as we transform the business from our daily deal email roots to a full ecommerce marketplace.”

“We’re also excited to announce today that we’ve signed an agreement to acquire Ticket Monster, one of the leading ecommerce companies in Korea,” said Lefkofsky. “Ticket Monster has been successful building a mobile commerce business in one of the largest markets in the world. It will serve as the cornerstone of our Asian business, bringing scale and ecommerce expertise to that region.”

The deal is expected to close in the first half of next year.

Here’s the earnings release in its entirety:

CHICAGO–(BUSINESS WIRE)– Groupon, Inc. (NASDAQ: GRPN) today announced financial results for the quarter ended September 30, 2013.

“Our Local business showed continued strength in the quarter, particularly in North America,” said Eric Lefkofsky, CEO of Groupon. “Mobile adoption continued to increase in Q3, reflected in our record 9 million app downloads. We’re pleased with our progress, but we still have work to do as we transform the business from our daily deal email roots to a full ecommerce marketplace.”

“We’re also excited to announce today that we’ve signed an agreement to acquire Ticket Monster, one of the leading ecommerce companies in Korea,” added Lefkofsky. “Ticket Monster has been successful building a mobile commerce business in one of the largest markets in the world. It will serve as the cornerstone of our Asian business, bringing scale and ecommerce expertise to that region.”

Third Quarter 2013 Summary

Gross billings, which reflect the total dollar value of customer purchases of goods and services, excluding any applicable taxes and net of estimated refunds, increased 10% globally to $1.34 billion in the third quarter 2013, compared with $1.22 billion in the third quarter 2012.North America growth of 20% and EMEA growth of 12% was offset by a 13% decline in Rest of World.

Revenue increased 5% to $595.1 million in the third quarter 2013, compared with $568.6 million in the third quarter 2012. North Americarevenue growth of 24% was offset by a 21% decline in EMEA and a 4% decline in Rest of World.

Gross profit was $359.6 million in the third quarter 2013, compared with $386.8 million in the third quarter 2012.

Operating income was $13.8 million in the third quarter 2013, compared with $25.4 million in the third quarter 2012. Operating income decreased $13.6 million compared with the second quarter 2013.

Operating income excluding stock compensation and acquisition-related costs, net, a non-GAAP financial measure, was $39.2 million in the third quarter 2013, compared with $50.5 million in the third quarter 2012. Operating income excluding stock compensation and acquisition-related costs, net, decreased $19.9 million compared with the second quarter 2013.

Revenue and operating profit in the third quarter 2012 included a one-time increase of $18.5 million related to breakage, or income related to unredeemed Groupons internationally, resulting from a tax ruling in Germany.

Adjusted EBITDA, a non-GAAP financial measure, was $62.3 million in the third quarter 2013, compared with $65.8 million in the third quarter 2012.

Third quarter 2013 net loss attributable to common stockholders was $2.6 million, or $0.00 per share, including stock compensation and acquisition-related costs, net, of $25.3 million ($17.0 million net of tax). Earnings per share excluding stock compensation and acquisition-related costs, net of tax, a non-GAAP financial measure, was $0.02 per share.

Operating cash flow for the trailing twelve months ended September 30, 2013 was $105.9 million. Free cash flow, a non-GAAP financial measure, was negative $27.0 million in the third quarter 2013, bringing free cash flow for the trailing twelve months ended September 30, 2013 to $22.3 million.

At the end of the quarter, Groupon had $1.1 billion in cash and cash equivalents.

Definitions and reconciliations of all non-GAAP financial measures are included below in the section titled “Non-GAAP Financial Measures” and in the accompanying tables.

Third Quarter Operating Highlights

  • Global units: Consolidated units, defined as vouchers and products sold before cancellations and refunds, increased 9% year-over-year to 46 million. North America units increased 19%, EMEA units increased 1%, and Rest of World units were flat year-over-year.
  • Active deals: At the end of the third quarter 2013, active deals in North America were estimated to be more than 65,000 on average, compared with more than 54,000 at the end of the second quarter 2013.
  • Active customers: Active customers, or customers that have purchased a Groupon within the last twelve months, grew 10% year-over-year, to 43.5 million as of September 30, 2013, comprising 19.9 million in North America, 14.0 million in EMEA, and 9.6 million in Rest of World.
  • Customer spend: Third quarter 2013 trailing twelve month billings per average active customer was $137, compared with $138 in the second quarter 2013.
  • Mobile: In September 2013, North America achieved a milestone, with more than half of transactions completed on mobile devices. This contributed to the more than 40% of transactions completed on mobile devices in the month globally. More than 60 million people have now downloaded Groupon mobile apps worldwide, with more than 9 million people downloading them in the third quarter alone.
  • Marketplace: The rollout of Groupon’s marketplace (“Pull”) continues to gain traction. In September 2013, approximately 6% of total traffic in North America was related to search activity, with customers that search spending over 25% more than those that do not.

Share Repurchase Program

During the third quarter of 2013, Groupon repurchased 770,900 shares of Class A common stock under its share repurchase authorization at an average price of $11.67 per share, for an aggregate purchase price of $9.0 million. Up to approximately $291 million of Class A common stock remains available for repurchase under the August 2013 share repurchase authorization. The program, which is intended to offset dilution from employee stock grants, terminates in August 2015.

Acquisition of Ticket Monster

Groupon also announced today that it has entered into an agreement to acquire Ticket Monster, a Korean ecommerce company, for aggregate consideration of $260 million, including at least $100 million in cash, and up to $160 million in Groupon Class A common stock, with the final cash and stock allocation to be determined upon close.

Ticket Monster is a leading ecommerce company in South Korea, and a subsidiary of LivingSocial, Inc. Founded in 2010, the Company serves millions of customers with a broad range of product, local and travel offers, and is one of the fastest growing ecommerce companies in the region. Ticket Monster has more than $800 million of annualized billings.

“Ticket Monster is a great fit for Groupon. The team shares our vision, already leveraging a truly mobile marketplace as well as one that has little reliance on email,” said Lefkofsky. “Ticket Monster is one of Korea’s most recognized and trusted brands, and we’re thrilled to have them join the family.”

The transaction is currently expected to close in the first half of 2014, subject to regulatory approval by the Korean Fair Trade Commission and the satisfaction of other customary closing conditions.

Outlook

In the fourth quarter 2013, Groupon anticipates normal seasonal strength and strong holiday sales interest, in addition to email headwinds and further investment in marketing initiatives to drive adoption of the Pull marketplace. As a result, for the fourth quarter 2013, the Company expects revenue of between $690 million and $740 million, operating income excluding stock compensation and acquisition-related expenses of between $40 million and $60 million, and earnings per share excluding stock compensation and acquisition-related expenses, net of tax, of between $0.00 and $0.02. Stock compensation is expected to be approximately $30 million, or approximately $20 million net of tax.

As a result, Groupon now expects full year 2013 GAAP operating income of between $72 million and $92 million.

This outlook includes costs related to the acquisition of Ticket Monster. It does not assume any additional impact of this or other acquisitions or investments, or material changes in foreign exchange rates.

Conference Call

A conference call will be webcast live today at 4:00 p.m. CT / 5:00 p.m. ET, and will be available on Groupon’s investor relations website athttp://investor.groupon.com. This call will contain forward-looking statements and other material information regarding the Company’s financial and operating results.

Groupon encourages investors to use its investor relations website as a way of easily finding information about the company. Groupon promptly makes available on this website, free of charge, the reports that the company files or furnishes with the SEC, corporate governance information (including Groupon’s Global Code of Conduct), and select press releases and social media postings.

Non-GAAP Financial Measures

In addition to financial results reported in accordance with U.S. generally accepted accounting principles (U.S. GAAP), we have provided the following non-GAAP financial measures in this release and the accompanying tables: foreign exchange rate neutral operating results, operating income (loss) excluding stock-based compensation and acquisition-related expense (benefit), net, Adjusted EBITDA, earnings per share excluding stock-based compensation and acquisition-related expense (benefit), net, and free cash flow. These non-GAAP financial measures are presented to aid investors in better understanding Groupon’s performance and to facilitate comparisons to many of our peers who present similar measures. However, these measures are not intended to be a substitute for those reported in accordance with U.S. GAAP. These measures may be different from non-GAAP financial measures used by other companies, even when similar terms are used to identify such measures. For reconciliations of these measures to the most applicable financial measures under U.S. GAAP, see “Non-GAAP Reconciliation Schedules” and “Supplemental Financial Information and Business Metrics” included in the tables accompanying this release.

We exclude the following items from one or more of our non-GAAP financial measures:

Stock-based compensation. We exclude stock-based compensation because it is primarily non-cash in nature and we believe that non-GAAP financial measures excluding this item provide meaningful supplemental information about our operating performance and liquidity.

Acquisition-related expense (benefit), net. Acquisition-related expense (benefit), net represents the change in the fair value of contingent consideration arrangements related to business combinations. The composition of our contingent consideration arrangements and the impact of those arrangements on our operating results vary over time based on a number of factors, including the terms of our business combinations and the timing of those transactions. We exclude acquisition-related expense (benefit), net because we believe that non-GAAP financial measures excluding this item provide meaningful supplemental information about our operating performance and facilitate comparisons to our historical operating results.

Depreciation and amortization. We exclude depreciation and amortization because it is non-cash in nature and we believe that non-GAAP financial measures excluding these items provide meaningful supplemental information about our operating performance and liquidity.

Descriptions of the non-GAAP financial measures included in this release and the accompanying tables are as follows:

Foreign exchange rate neutral operating results show our current period operating results as if foreign currency exchange rates had remained the same as those in effect in the comparable period.

Operating income (loss) excluding stock-based compensation and acquisition-related expense (benefit), net is a non-GAAP financial measure that comprises the consolidated total of the segment operating income (loss) of our three segments, North America, EMEA, and Rest of World. We use consolidated operating income (loss) excluding stock-based compensation and acquisition-related expense (benefit), net to allocate resources and evaluate performance internally.

Adjusted EBITDA is a non-GAAP financial measure that we define as net income (loss) excluding income taxes, interest and other non-operating items, depreciation and amortization, stock-based compensation, and acquisition-related expense (benefit), net. Adjusted EBITDA is similar to Operating income (loss) excluding stock-based compensation and acquisition-related expense (benefit), net, except Adjusted EBITDA also excludes depreciation and amortization. Our definition of Adjusted EBITDA may differ from similar measures used by other companies, even when similar terms are used to identify such measures. We believe that Adjusted EBITDA is a meaningful measure for evaluating our operating performance.

Earnings per share excluding stock-based compensation and acquisition-related expense (benefit), net is a non-GAAP financial measure that adjusts our earnings (loss) per share to exclude the impact of stock-based compensation expense, acquisition-related expense (benefit), net and the income tax effect of those items. We believe that this non-GAAP financial measure provides meaningful supplemental information for evaluating our operating performance.

Free cash flow is a non-GAAP financial measure that comprises net cash provided by operating activities less purchases of property and equipment and capitalized software. We use free cash flow, and ratios based on it, to conduct and evaluate our business because, although it is similar to cash flow from operations, we believe that it typically represents a more useful measure of cash flows because purchases of fixed assets, software developed for internal use and website development costs are necessary components of our ongoing operations. Free cash flow is not intended to represent the total increase or decrease in Groupon’s cash balance for the applicable period.

Note on Forward-Looking Statements

The statements contained in this release that refer to plans and expectations for the next quarter or the future are forward-looking statements that involve a number of risks and uncertainties, and actual results could differ materially from those discussed. The risks and uncertainties that could cause our results to differ materially from those included in the forward-looking statements include, but are not limited to, volatility in our revenue and operating results; risks related to our business strategy; responding to changes in the market; effectively dealing with challenges arising from our international operations; retaining existing customers and adding new customers; retaining existing merchant partners and adding new merchant partners; incurring expenses as we expand our business; competing against competitors with more financial resources than us; maintaining favorable terms with our business partners; maintaining a strong brand; managing inventory and order fulfillment; integrating our technology platforms; managing refund risks; retaining our executive team; litigation; regulations, including the CARD Act and regulation of the Internet; tax liabilities; tax legislation; maintaining our information technology infrastructure; security breaches; protecting our intellectual property; handling acquisitions, joint ventures and strategic investments effectively; seasonality; payment-related risks; customer and merchant partner fraud; global economic uncertainty; compliance with rules and regulations associated with being a public company; and our ability to raise capital if necessary. We urge you to refer to the factors included under the headings “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the company’s Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q, copies of which may be obtained by visiting the company’s Investor Relations web site athttp://investor.groupon.com or the SEC’s web site at www.sec.gov. Groupon’s actual results could differ materially from those predicted or implied and reported results should not be considered an indication of future performance.

You should not rely upon forward-looking statements as predictions of future events. Although Groupon believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur. Moreover, neither the company nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. The forward-looking statements reflect Groupon’s expectations as of November 7, 2013. Groupon undertakes no obligation to update publicly any forward-looking statements for any reason after the date of this release to conform these statements to actual results or to changes in its expectations.

About Groupon

Groupon (NASDAQ: GRPN) is a global leader in local commerce, making it easy for people around the world to search and discover great businesses at unbeatable prices. Groupon is reinventing the traditional small business world by providing merchants with a suite of products and services, including customizable deals, payments processing capabilities and point-of-sale solutions to help them attract more customers and run their operations more effectively. By leveraging the company’s global relationships and scale, Groupon offers consumers incredible deals on the best stuff to eat, see, do, and buy in 48 countries. With Groupon, shoppers discover the best a city has to offer with Groupon Local, enjoy vacations with GrouponGetaways, and find a curated selection of electronics, fashion, home furnishings and more with Groupon Goods. To subscribe to Groupon emails, visit www.Groupon.com. To learn more about the company’s merchant solutions and how to work with Groupon, visit www.GrouponWorks.com.

Groupon, Inc.
Summary Consolidated and Segment Results
(in thousands, except share and per share amounts)
(unaudited)
Three Months Ended   Nine Months Ended  
September 30, Y/Y % 
Growth 
excluding
FX(2)
September 30, Y/Y % 
Growth 
excluding
FX(2)
2013 2012 Y/Y % 
Growth
FX Effect(2) 2013 2012 Y/Y % 
Growth
FX Effect(2)
Gross Billings (1)
North America $ 664,999 $ 552,369 20.4 % $ (363 ) 20.5 % $ 2,058,523 $ 1,654,201 24.4 % $ (564 ) 24.5 %
EMEA 443,318 396,087 11.9 % 13,171 8.6 % 1,417,886 1,396,027 1.6 % 18,681 0.2 %
Rest of World 234,331 269,800 (13.1 ) % (24,522 ) (4.1 ) % 687,814 809,504 (15.0 ) % (50,628 ) (8.8 ) %
Consolidated gross billings $ 1,342,648 $ 1,218,256 10.2 % $ (11,714 ) 11.2 % $ 4,164,223 $ 3,859,732 7.9 % $ (32,511 ) 8.7 %
Revenue
North America $ 360,838 $ 291,603 23.7 % $ (126 ) 23.8 % $ 1,077,574 $ 790,349 36.3 % $ (197 ) 36.4 %
EMEA 147,950 187,287 (21.0 ) % 4,547 (23.4 ) % 491,710 629,198 (21.9 ) % 6,685 (22.9 ) %
Rest of World 86,271 89,662 (3.8 ) % (9,665 ) 7.0 % 235,924 276,623 (14.7 ) % (19,632 ) (7.6 ) %
Consolidated revenue $ 595,059 $ 568,552 4.7 % $ (5,244 ) 5.6 % $ 1,805,208 $ 1,696,170 6.4 % $ (13,144 ) 7.2 %
Income from operations $ 13,812 $ 25,438 (45.7 ) % $ (1,239 ) (40.8 ) % $ 62,402 $ 111,562 (44.1 ) % $ 285 (44.3 ) %
Net (loss) income attributable to common stockholders $ (2,580 ) $ (2,979 ) $ (14,146 ) $ 13,712
Net (loss) earnings per share
Basic $ (0.00 ) $ (0.00 ) $ (0.02 ) $ 0.02
Diluted $ (0.00 ) $ (0.00 ) $ (0.02 ) $ 0.02
Weighted average basic shares outstanding 666,432,848 653,223,610 662,531,567 648,021,943
Weighted average diluted shares outstanding 666,432,848 653,223,610 662,531,567 663,557,250
(1) Represents the total dollar value of customer purchases of goods and services, excluding any applicable taxes and net of estimated refunds. Includes direct billings and third party and other billings.
(2) Represents the change in financial measures that would have resulted had average exchange rates in the reporting period been the same as those in effect during the three and nine months ended September 30, 2012.
Groupon, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Three Months EndedSeptember 30, Nine Months EndedSeptember 30,
2013 2012 2013 2012
Operating activities
Net (loss) income $ (1,292 ) $ (940 ) $ (10,085 ) $ 29,016
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization 23,149 15,310 65,317 39,836
Stock-based compensation 26,870 22,619 89,223 77,706
Deferred income taxes (659 ) (3,389 ) (1,225 ) 9,608
Excess tax benefits on stock-based compensation (8,348 ) (2,870 ) (12,116 ) (24,620 )
Loss on equity method investments 25 138 58 8,694
Acquisition-related (benefit) expense, net (1,529 ) 2,431 (2,276 ) 744
Gain on E-Commerce transaction - - - (56,032 )
Change in assets and liabilities, net of acquisitions:
Restricted cash (3,348 ) 973 (81 ) (1,855 )
Accounts receivable 11,940 (10,274 ) 8,999 (2,189 )
Prepaid expenses and other current assets (2,846 ) (3,192 ) 13,146 (24,937 )
Accounts payable (3,036 ) (5,094 ) (25,867 ) 13,174
Accrued merchant and supplier payables (34,315 ) 21,868 (72,290 ) 53,889
Accrued expenses and other current liabilities (20,553 ) 4,933 (27,790 ) 68,010
Other, net 2,037 (425 ) 15,144 10,073
Net cash (used in) provided by operating activities (11,905 ) 42,088 40,157 201,117
Net cash used in investing activities (26,444 ) (35,629 ) (72,985 ) (142,226 )
Net cash (used in) provided by financing activities (8,970 ) 2,707 (26,253 ) 18,590
Effect of exchange rate changes on cash and cash equivalents 5,165 6,047 (10,351 ) 595
Net (decrease) increase in cash and cash equivalents (42,154 ) 15,213 (69,432 ) 78,076
Cash and cash equivalents, beginning of period 1,182,011 1,185,798 1,209,289 1,122,935
Cash and cash equivalents, end of period $ 1,139,857 $ 1,201,011 $ 1,139,857 $ 1,201,011
Groupon, Inc.
Consolidated Statements of Operations
(in thousands, except share and per share amounts)
(unaudited)
Three Months Ended September 30, Nine Months Ended September 30,
2013 2012 2013 2012
Revenue:
Third party and other $ 394,987 $ 423,564 $ 1,252,966 $ 1,466,602
Direct 200,072 144,988 552,242 229,568
Total revenue 595,059 568,552 1,805,208 1,696,170
Cost of revenue:
Third party and other 54,001 54,173 179,524 233,834
Direct 181,436 127,613 502,359 202,634
Total cost of revenue 235,437 181,786 681,883 436,468
Gross Profit 359,622 386,766 1,123,325 1,259,702
Operating expenses:
Marketing 53,265 70,919 158,319 275,941
Selling, general and administrative 294,074 287,978 904,880 871,455
Acquisition-related (benefit) expense, net (1,529 ) 2,431 (2,276 ) 744
Total operating expenses 345,810 361,328 1,060,923 1,148,140
Income from operations 13,812 25,438 62,402 111,562
Loss on equity method investments (25 ) (138 ) (58 ) (8,694 )
Other income (expense), net 857 617 (9,772 ) 54,445
Income before provision for income taxes 14,644 25,917 52,572 157,313
Provision for income taxes 15,936 26,857 62,657 128,297
Net (loss) income (1,292 ) (940 ) (10,085 ) 29,016
Net income attributable to noncontrolling interests (1,288 ) (706 ) (4,061 ) (2,806 )
Net (loss) income attributable to Groupon, Inc. (2,580 ) (1,646 ) (14,146 ) 26,210
Adjustment of redeemable noncontrolling interests to redemption value - (1,333 ) - (12,498 )
Net (loss) income attributable to common stockholders $ (2,580 ) $ (2,979 ) $ (14,146 ) $ 13,712
Net (loss) earnings per share
Basic $ (0.00 ) $ (0.00 ) $ (0.02 ) $ 0.02
Diluted $ (0.00 ) $ (0.00 ) $ (0.02 ) $ 0.02
Weighted average number of shares outstanding
Basic 666,432,848 653,223,610 662,531,567 648,021,943
Diluted 666,432,848 653,223,610 662,531,567 663,557,250
Groupon, Inc.
Consolidated Balance Sheets
(in thousands, except share and per share amounts)
September 30, 2013 December 31, 2012
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 1,139,857 $ 1,209,289
Accounts receivable, net 86,233 96,713
Deferred income taxes 30,692 31,211
Prepaid expenses and other current assets 136,543 150,573
Total current assets 1,393,325 1,487,786
Property, equipment and software, net of accumulated depreciation and amortization of $93,853 and
$46,236, respectively
126,881 121,072
Goodwill 218,224 206,684
Intangible assets, net 33,182 42,597
Investments 104,130 84,209
Deferred income taxes, non-current 29,476 29,916
Other non-current assets 45,322 59,210
Total Assets $ 1,950,540 $ 2,031,474
Liabilities and Equity
Current liabilities:
Accounts payable $ 33,684 $ 59,865
Accrued merchant and supplier payables 591,476 671,305
Accrued expenses 211,718 246,924
Deferred income taxes 52,216 53,700
Other current liabilities 126,764 136,647
Total current liabilities 1,015,858 1,168,441
Deferred income taxes, non-current 20,356 20,860
Other non-current liabilities 105,529 100,072
Total Liabilities 1,141,743 1,289,373
Commitments and contingencies
Stockholders’ Equity
Class A common stock, par value $0.0001 per share, 2,000,000,000 shares authorized, 666,100,949 shares
issued and 665,330,049 shares outstanding at September 30, 2013 and 654,523,706 shares issued
and outstanding at December 31, 2012
66 65
Class B common stock, par value $0.0001 per share, 10,000,000 shares authorized, 2,399,976 shares
issued and outstanding at September 30, 2013 and December 31, 2012
- -
Common stock, par value $0.0001 per share, 2,010,000,000 shares authorized, no shares issued and
outstanding at September 30, 2013, and December 31, 2012
- -
Additional paid-in capital 1,563,815 1,485,006
Treasury stock, at cost, 770,900 shares at September 30, 2013 and no shares at December 31, 2012 (9,014 ) -
Accumulated deficit (767,623 ) (753,477 )
Accumulated other comprehensive income 23,579 12,446
Total Groupon, Inc. Stockholders’ Equity 810,823 744,040
Noncontrolling interests (2,026 ) (1,939 )
Total Equity 808,797 742,101
Total Liabilities and Equity $ 1,950,540 $ 2,031,474
Groupon, Inc.
Segment Information
(in thousands)
(unaudited)
Three Months Ended September 30, Nine Months Ended September 30,
2013 2012 2013 2012
North America
Gross Billings (1) $ 664,999 $ 552,369 $ 2,058,523 $ 1,654,201
Revenue $ 360,838 $ 291,603 $ 1,077,574 $ 790,349
Segment cost of revenue and operating expenses(2) 335,670 252,510 962,532 667,655
Segment operating income(2) $ 25,168 $ 39,093 $ 115,042 $ 122,694
Segment operating income as a percent of segment revenue 7.0 % 13.4 % 10.7 % 15.5 %
EMEA
Gross Billings (1) $ 443,318 $ 396,087 $ 1,417,886 $ 1,396,027
Revenue(3) $ 147,950 $ 187,287 $ 491,710 $ 629,198
Segment cost of revenue and operating expenses(2) 132,346 158,179 417,222 531,968
Segment operating income(2) $ 15,604 $ 29,108 $ 74,488 $ 97,230
Segment operating income as a percent of segment revenue 10.5 % 15.5 % 15.1 % 15.5 %
Rest of World
Gross Billings (1) $ 234,331 $ 269,800 $ 687,814 $ 809,504
Revenue $ 86,271 $ 89,662 $ 235,924 $ 276,623
Segment cost of revenue and operating expenses(2) 87,890 107,375 276,105 306,535
Segment operating loss(2) $ (1,619 ) $ (17,713 ) $ (40,181 ) $ (29,912 )
Segment operating loss as a percent of segment revenue (1.9 ) % (19.8 ) % (17.0 ) % (10.8 ) %
Consolidated
Gross Billings (1) $ 1,342,648 $ 1,218,256 $ 4,164,223 $ 3,859,732
Revenue $ 595,059 $ 568,552 $ 1,805,208 $ 1,696,170
Segment cost of revenue and operating expenses(2) 555,906 518,064 1,655,859 1,506,158
Segment operating income(2) $ 39,153 $ 50,488 $ 149,349 $ 190,012
Segment operating income as a percent of segment revenue 6.6 % 8.9 % 8.3 % 11.2 %
Stock-based compensation 26,870 22,619 89,223 77,706
Acquisition-related (benefit) expense, net (1,529 ) 2,431 (2,276 ) 744
Income from operations 13,812 25,438 62,402 111,562
Loss on equity method investments 25 138 58 8,694
Other (income) expense, net (857 ) (617 ) 9,772 (54,445 )
Income before provision for income taxes 14,644 25,917 52,572 157,313
Provision for income taxes 15,936 26,857 62,657 128,297
Net (loss) income $ (1,292 ) $ (940 ) $ (10,085 ) $ 29,016
(1) Represents the total dollar value of customer purchases of goods and services, excluding any applicable taxes and net of estimated refunds. Includes direct billings and third party and other billings.
(2) Segment cost of revenue and operating expenses and segment operating income (loss) exclude stock-based compensation and acquisition-related (benefit) expense, net.
(3) EMEA segment revenue for the three and nine months ended September 30, 2012 included an $18.5 million one-time increase to third party revenue for unredeemed vouchers (“Groupons”) in Germany, which represented the cumulative impact of deals in that jurisdiction for which, based on a German tax ruling, the Company’s obligation to the merchant would have ended prior to the quarter ended September 30, 2012.
Groupon, Inc.
Non-GAAP Reconciliation Schedules
(in thousands, except share and per share amounts)
(unaudited)
The following are reconciliations of diluted earnings per share excluding stock-based compensation and acquisition-related benefit, net and foreign exchange rate neutral operating results to the most comparable U.S. GAAP financial measures. See “Supplemental Financial Information and Business Metrics” for reconciliations of Adjusted EBITDA, operating income excluding stock-based compensation and acquisition-related benefit, net and free cash flow to the most comparable U.S. GAAP financial measures.
The following is a reconciliation of diluted net loss per share to diluted earnings per share excluding stock-based compensation and acquisition-related benefit, net for the three and nine months ended September 30, 2013:
Three Months Ended Nine Months Ended
September 30, 2013 September 30, 2013
Net loss attributable to common stockholders $ (2,580 ) $ (14,146 )
Stock-based compensation 26,870 89,223
Acquisition-related benefit, net (1,529 ) (2,276 )
Income tax effect of adjustments (8,292 ) (27,202 )
Net income attributable to common stockholders excluding stock-based
compensation and acquisition-related benefit, net $ 14,469 $ 45,599
Diluted shares 666,432,848 662,531,567
Incremental diluted shares (1) 18,501,055 15,107,135
Adjusted diluted shares 684,933,903 677,638,702
Diluted net loss per share $ (0.00 ) $ (0.02 )
Impact of stock-based compensation and acquisition-related
benefit, net and the related income tax effects 0.02 0.09
Diluted earnings per share excluding stock-based compensation and
acquisition-related benefit, net $ 0.02 $ 0.07
(1) Outstanding equity awards are not reflected in the diluted net loss per share calculation for the three and nine months ended September 30, 2013 because the effect would be antidilutive. However, those awards have been reflected in the calculation of diluted earnings per share excluding stock-based compensation and acquisition-related benefit, net for the three and nine months ended September 30, 2013 because they have a dilutive effect on that calculation.
The following are reconciliations of foreign exchange rate neutral operating results to the most comparable U.S. GAAP financial measures, “Gross Billings,” “Revenue” and “Income from operations,” for the three and nine months ended September 30, 2013.
The effect on the Company’s gross billings, revenue and income from operations from changes in exchange rates versus the U.S. Dollar for the three months ended September 30, 2013 was as follows:
Three Months Ended September 30, 2013 Three Months Ended September 30, 2013
At Avg. Exchange At Avg. Exchange
Q3 2012Rates (1) RateEffect (2) AsReported Q2 2013Rates (3) RateEffect (2) AsReported
Gross billings $ 1,354,362 $ (11,714 ) $ 1,342,648 $ 1,349,460 $ (6,812 ) $ 1,342,648
Revenue $ 600,303 $ (5,244 ) $ 595,059 $ 598,372 $ (3,313 ) $ 595,059
Income from operations $ 15,051 $ (1,239 ) $ 13,812 $ 14,258 $ (446 ) $ 13,812
The effect on the Company’s gross billings, revenue and income from operations from changes in exchange rates versus the U.S. Dollar for the nine months ended September 30, 2013 was as follows:
Nine Months Ended September 30, 2013 Nine Months Ended September 30, 2013
At Avg. Exchange At Avg. Exchange
Q3 2012 YTDRates (1) RateEffect (2) AsReported Q4’12 – Q2’13Rates (3) RateEffect (2) AsReported
Gross billings $ 4,196,734 $ (32,511 ) $ 4,164,223 $ 4,185,923 $ (21,700 ) $ 4,164,223
Revenue $ 1,818,352 $ (13,144 ) $ 1,805,208 $ 1,813,381 $ (8,173 ) $ 1,805,208
Income from operations $ 62,117 $ 285 $ 62,402 $ 63,389 $ (987 ) $ 62,402
(1) Represents the financial statement balances that would have resulted had average exchange rates in the reported period been the same as those in effect during the three and nine months ended September 30, 2012.
(2) Represents the increase or decrease in reported amounts resulting from changes in exchange rates from those in effect in the comparable period.
(3) Represents the financial statement balances that would have resulted had average exchange rates in the reported period been the same as those in effect during the three and nine months ended June 30, 2013.
Groupon, Inc.
Supplemental Financial Information and Business Metrics(14)
(financial data in thousands, except per share data; active customers in millions)
(unaudited)
Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013
Segments
North America Segment
Gross Billings (1)
Local (2) Gross Billings
Third Party $ 349,293 $ 430,255 $ 450,140 $ 449,770 $ 401,756
Direct 6,450 - - 693 1,040
Total Local Gross Billings $ 355,743 $ 430,255 $ 450,140 $ 450,463 $ 402,796
Goods Gross Billings
Third Party $ 25,508 $ 31,270 $ 17,294 $ 15,501 $ 12,650
Direct 126,608 209,575 148,065 181,377 181,915
Total Goods Gross Billings $ 152,116 $ 240,845 $ 165,359 $ 196,878 $ 194,565
Travel and Other Gross Billings
Third Party and Other $ 44,510 $ 47,852 $ 65,820 $ 64,864 $ 67,638
Direct - - - - -
Total Travel and Other Gross Billings $ 44,510 $ 47,852 $ 65,820 $ 64,864 $ 67,638
Total Gross Billings
Third Party and Other $ 419,311 $ 509,377 $ 533,254 $ 530,135 $ 482,044
Direct 133,058 209,575 148,065 182,070 182,955
Total Gross Billings $ 552,369 $ 718,952 $ 681,319 $ 712,205 $ 664,999
Year-over-year growth 38 % 51 % 23 % 30 % 20 %
% of Consolidated Gross Billings 45 % 47 % 48 % 50 % 50 %
Gross Billings Trailing Twelve Months (TTM) $ 2,130,008 $ 2,373,153 $ 2,500,915 $ 2,664,845 $ 2,777,475
Revenue (3)
Local Revenue
Third Party $ 134,993 $ 142,454 $ 171,593 $ 174,117 $ 158,189
Direct 6,450 - - 693 1,040
Total Local Revenue $ 141,443 $ 142,454 $ 171,593 $ 174,810 $ 159,229
Goods Revenue
Third Party $ 13,064 $ 11,877 $ 3,144 $ 4,651 $ 3,999
Direct 126,608 209,575 148,065 181,377 181,915
Total Goods Revenue $ 139,672 $ 221,452 $ 151,209 $ 186,028 $ 185,914
Travel and Other Revenue
Third Party and Other $ 10,488 $ 11,445 $ 16,752 $ 16,344 $ 15,695
Direct - - - - -
Total Travel and Other Revenue $ 10,488 $ 11,445 $ 16,752 $ 16,344 $ 15,695
Total Revenue
Third Party and Other Revenue $ 158,545 $ 165,776 $ 191,489 $ 195,112 $ 177,883
Direct Revenue 133,058 209,575 148,065 182,070 182,955
Total Revenue $ 291,603 $ 375,351 $ 339,554 $ 377,182 $ 360,838
Year-over-year growth 81 % 109 % 42 % 45 % 24 %
% of Consolidated Revenue 51 % 59 % 56 % 62 % 61 %
Revenue TTM $ 969,987 $ 1,165,700 $ 1,266,689 $ 1,383,690 $ 1,452,925
Cost of Revenue (4)
Local Cost of Revenue
Third Party $ 13,176 $ 23,203 $ 25,915 $ 19,818 $ 18,985
Direct 5,231 - - 636 1,887
Total Local Cost of Revenue $ 18,407 $ 23,203 $ 25,915 $ 20,454 $ 20,872
Goods Cost of Revenue
Third Party $ 1,275 $ 1,935 $ 475 $ 522 $ 480
Direct 110,329 196,789 138,278 158,529 163,825
Total Goods Cost of Revenue $ 111,604 $ 198,724 $ 138,753 $ 159,051 $ 164,305
Travel and Other Cost of Revenue
Third Party and Other $ 1,024 $ 1,864 $ 2,530 $ 3,091 $ 4,092
Direct - - - - -
Total Travel and Other Cost of Revenue $ 1,024 $ 1,864 $ 2,530 $ 3,091 $ 4,092
Total Cost of Revenue
Third Party and Other Cost of Revenue $ 15,475 $ 27,002 $ 28,920 $ 23,431 $ 23,557
Direct Cost of Revenue 115,560 196,789 138,278 159,165 165,712
Total Cost of Revenue $ 131,035 $ 223,791 $ 167,198 $ 182,596 $ 189,269
% of North America Total Revenue 45 % 60 % 49 % 48 % 52 %
Gross Profit
Local Gross Profit
Third Party $ 121,817 $ 119,251 $ 145,678 $ 154,299 $ 139,204
Direct 1,219 - - 57 (847 )
Total Local Gross Profit $ 123,036 $ 119,251 $ 145,678 $ 154,356 $ 138,357
% of North America Total Local Revenue 87.0 % 83.7 % 84.9 % 88.3 % 86.9 %
% of North America Total Local Gross Billings 34.6 % 27.7 % 32.4 % 34.3 % 34.3 %
Goods Gross Profit
Third Party $ 11,789 $ 9,942 $ 2,669 $ 4,129 $ 3,519
Direct 16,279 12,786 9,787 22,848 18,090
Total Goods Gross Profit $ 28,068 $ 22,728 $ 12,456 $ 26,977 $ 21,609
% of North America Total Goods Revenue 20.1 % 10.3 % 8.2 % 14.5 % 11.6 %
% of North America Total Goods Gross Billings 18.5 % 9.4 % 7.5 % 13.7 % 11.1 %
Travel and Other Gross Profit
Third Party and Other $ 9,464 $ 9,581 $ 14,222 $ 13,253 $ 11,603
Direct - - - - -
Total Travel and Other Gross Profit $ 9,464 $ 9,581 $ 14,222 $ 13,253 $ 11,603
% of North America Total Travel and Other Revenue 90.2 % 83.7 % 84.9 % 81.1 % 73.9 %
% of North America Total Travel and Other Gross Billings 21.3 % 20.0 % 21.6 % 20.4 % 17.2 %
Total Gross Profit
Third Party and Other $ 143,070 $ 138,774 $ 162,569 $ 171,681 $ 154,326
Direct 17,498 12,786 9,787 22,905 17,243
Total Gross Profit $ 160,568 $ 151,560 $ 172,356 $ 194,586 $ 171,569
% of North America Total Revenue 55.1 % 40.4 % 50.8 % 51.6 % 47.5 %
% of North America Total Gross Billings 29.1 % 21.1 % 25.3 % 27.3 % 25.8 %
Operating Income Excl Stock-Based Compensation (SBC), Acquisition-Related (Benefit) Expense, net $ 39,093 $ 17,032 $ 41,366 $ 48,508 $ 25,168
Year-over-year growth 108 % (7 ) % 3 % 12 % (36 ) %
% of Consolidated Operating Income Excl SBC, Acq-Related 77 % 124 % 81 % 82 % 64 %
Operating Margin Excl SBC, Acq-Related (% of North America Total revenue) 13.4 % 4.5 % 12.2 % 12.9 % 7.0 %
Year-over-year growth (bps) 170 (570 ) (460 ) (380 ) (640 )
Operating Income TTM Excl SBC, Acq-Related $ 140,933 $ 139,726 $ 140,920 $ 145,999 $ 132,074
Operating Margin TTM Excl SBC, Acq-Related (% of North America Total TTM revenue) 14.5 % 12.0 % 11.1 % 10.6 % 9.1 %
Year-over-year growth (bps) 2,100 1,120 200 (380 ) (540 )
EMEA Segment
Gross Billings
Local Gross Billings
Third Party $ 182,983 $ 239,944 $ 259,423 $ 241,108 $ 207,110
Direct - - - - -
Total Local Gross Billings $ 182,983 $ 239,944 $ 259,423 $ 241,108 $ 207,110
Goods Gross Billings
Third Party $ 136,960 $ 195,582 $ 141,742 $ 165,413 $ 160,578
Direct 9,880 9,020 7,451 2,181 9,271
Total Goods Gross Billings $ 146,840 $ 204,602 $ 149,193 $ 167,594 $ 169,849
Travel and Other Gross Billings
Third Party and Other $ 66,264 $ 87,935 $ 83,702 $ 73,548 $ 66,359
Direct - - - - -
Total Travel and Other Gross Billings $ 66,264 $ 87,935 $ 83,702 $ 73,548 $ 66,359
Total Gross Billings
Third Party and Other $ 386,207 $ 523,461 $ 484,867 $ 480,069 $ 434,047
Direct 9,880 9,020 7,451 2,181 9,271
Total Gross Billings $ 396,087 $ 532,481 $ 492,318 $ 482,250 $ 443,318
Year-over-year growth (21 ) % 2 % (8 ) % 4 % 12 %
Year-over-year growth, excluding FX (5) (13 ) % 4 % (9 ) % 4 % 9 %
% of Consolidated Gross Billings 33 % 35 % 35 % 34 % 33 %
Gross Billings TTM $ 1,920,215 $ 1,928,507 $ 1,883,265 $ 1,903,136 $ 1,950,367
Revenue
Local Revenue
Third Party $ 109,552 $ 98,668 $ 110,715 $ 109,481 $ 91,448
Direct - - - - -
Total Local Revenue $ 109,552 $ 98,668 $ 110,715 $ 109,481 $ 91,448
Goods Revenue
Third Party $ 49,649 $ 49,173 $ 45,875 $ 32,938 $ 32,008
Direct 9,880 9,020 7,451 2,181 9,271
Total Goods Revenue $ 59,529 $ 58,193 $ 53,326 $ 35,119 $ 41,279
Travel and Other Revenue
Third Party and Other $ 18,206 $ 19,417 $ 19,757 $ 15,362 $ 15,223
Direct - - - - -
Total Travel and Other Revenue $ 18,206 $ 19,417 $ 19,757 $ 15,362 $ 15,223
Total Revenue
Third Party and Other Revenue $ 177,407 $ 167,258 $ 176,347 $ 157,781 $ 138,679
Direct Revenue 9,880 9,020 7,451 2,181 9,271
Total Revenue $ 187,287 $ 176,278 $ 183,798 $ 159,962 $ 147,950
Year-over-year growth (4 ) % (27 ) % (20 ) % (24 ) % (21 ) %
Year-over-year growth, excluding FX(5) 6 % (25 ) % (20 ) % (25 ) % (23 ) %
% of Consolidated Revenue 33 % 28 % 31 % 26 % 25 %
Revenue TTM $ 869,268 $ 805,476 $ 758,918 $ 707,325 $ 667,988
Cost of Revenue
Local Cost of Revenue
Third Party $ 10,416 $ 10,622 $ 14,192 $ 10,898 $ 10,254
Direct - - - - -
Total Local Cost of Revenue $ 10,416 $ 10,622 $ 14,192 $ 10,898 $ 10,254
Goods Cost of Revenue
Third Party $ 4,721 $ 5,294 $ 5,880 $ 4,705 $ 3,972
Direct 7,845 14,550 7,472 3,306 8,364
Total Goods Cost of Revenue $ 12,566 $ 19,844 $ 13,352 $ 8,011 $ 12,336
Travel and Other Cost of Revenue
Third Party and Other $ 1,731 $ 2,090 $ 2,533 $ 1,522 $ 1,679
Direct - - - - -
Total Travel and Other Cost of Revenue $ 1,731 $ 2,090 $ 2,533 $ 1,522 $ 1,679
Total Cost of Revenue
Third Party and Other Cost of Revenue $ 16,868 $ 18,006 $ 22,605 $ 17,125 $ 15,905
Direct Cost of Revenue 7,845 14,550 7,472 3,306 8,364
Total Cost of Revenue $ 24,713 $ 32,556 $ 30,077 $ 20,431 $ 24,269
% of EMEA Total Revenue 13 % 18 % 16 % 13 % 16 %
Gross Profit
Local Gross Profit
Third Party $ 99,136 $ 88,046 $ 96,523 $ 98,583 $ 81,194
Direct - - - - -
Total Local Gross Profit $ 99,136 $ 88,046 $ 96,523 $ 98,583 $ 81,194
% of EMEA Total Local Revenue 90.5 % 89.2 % 87.2 % 90.0 % 88.8 %
% of EMEA Total Local Gross Billings 54.2 % 36.7 % 37.2 % 40.9 % 39.2 %
Goods Gross Profit
Third Party $ 44,928 $ 43,879 $ 39,995 $ 28,233 $ 28,036
Direct 2,035 (5,530 ) (21 ) (1,125 ) 907
Total Goods Gross Profit $ 46,963 $ 38,349 $ 39,974 $ 27,108 $ 28,943
% of EMEA Total Goods Revenue 78.9 % 65.9 % 75.0 % 77.2 % 70.1 %
% of EMEA Total Goods Gross Billings 32.0 % 18.7 % 26.8 % 16.2 % 17.0 %
Travel and Other Gross Profit
Third Party and Other $ 16,475 $ 17,327 $ 17,224 $ 13,840 $ 13,544
Direct - - - - -
Total Travel and Other Gross Profit $ 16,475 $ 17,327 $ 17,224 $ 13,840 $ 13,544
% of EMEA Total Travel and Other Revenue 90.5 % 89.2 % 87.2 % 90.1 % 89.0 %
% of EMEA Total Travel and Other Gross Billings 24.9 % 19.7 % 20.6 % 18.8 % 20.4 %
Total Gross Profit
Third Party and Other $ 160,539 $ 149,252 $ 153,742 $ 140,656 $ 122,774
Direct 2,035 (5,530 ) (21 ) (1,125 ) 907
Total Gross Profit $ 162,574 $ 143,722 $ 153,721 $ 139,531 $ 123,681
% of EMEA Total Revenue 86.8 % 81.5 % 83.6 % 87.2 % 83.6 %
% of EMEA Total Gross Billings 41.0 % 27.0 % 31.2 % 28.9 % 27.9 %
Operating Income Excl SBC, Acq-Related $ 29,107 $ 8,776 $ 34,176 $ 24,708 $ 15,604
Year-over-year growth 14 % (77 ) % (6 ) % (22 ) % (46 ) %
% of Consolidated Operating Income Excl SBC, Acq-Related 58 % 64 % 67 % 42 % 40 %
Operating Margin Excl SBC, Acq-Related (% of EMEA Total revenue) 15.5 % 5.0 % 18.6 % 15.4 % 10.5 %
Year-over-year growth (bps) 237 (1,073 ) 282 40 (500 )
Operating Income TTM Excl SBC, Acq-Related $ 134,945 $ 106,005 $ 103,853 $ 96,767 $ 83,264
Operating Margin TTM Excl SBC, Acq-Related (% of EMEA Total TTM revenue) 15.5 % 13.2 % 13.7 % 13.7 % 12.5 %
Year-over-year growth (bps)(6) N/A N/A (13 ) (132 ) (300 )
Rest of World Segment
Gross Billings
Local Gross Billings
Third Party $ 145,061 $ 128,954 $ 119,990 $ 114,630 $ 118,325
Direct - - - - -
Total Local Gross Billings $ 145,061 $ 128,954 $ 119,990 $ 114,630 $ 118,325
Goods Gross Billings
Third Party $ 74,504 $ 89,475 $ 70,994 $ 66,774 $ 71,127
Direct 2,050 6,581 6,778 5,625 7,846
Total Goods Gross Billings $ 76,554 $ 96,056 $ 77,772 $ 72,399 $ 78,973
Travel and Other Gross Billings
Third Party and Other $ 48,185 $ 44,009 $ 36,370 $ 32,322 $ 37,033
Direct - - - - -
Total Travel and Other Gross Billings $ 48,185 $ 44,009 $ 36,370 $ 32,322 $ 37,033
Total Gross Billings
Third Party and Other $ 267,750 $ 262,438 $ 227,354 $ 213,726 $ 226,485
Direct 2,050 6,581 6,778 5,625 7,846
Total Gross Billings $ 269,800 $ 269,019 $ 234,132 $ 219,351 $ 234,331
Year-over-year growth 6 % 17 % (11 ) % (21 ) % (13 ) %
Year-over-year growth, excluding FX(5) 15 % 20 % (6 ) % (16 ) % (4 ) %
% of Consolidated Gross Billings 22 % 18 % 17 % 16 % 17 %
Gross Billings TTM $ 1,040,377 $ 1,078,524 $ 1,048,973 $ 992,302 $ 956,833
Revenue
Local Revenue
Third Party $ 54,632 $ 46,166 $ 45,085 $ 43,323 $ 51,507
Direct - - - - -
Total Local Revenue $ 54,632 $ 46,166 $ 45,085 $ 43,323 $ 51,507
Goods Revenue
Third Party $ 21,661 $ 25,529 $ 18,062 $ 14,985 $ 17,215
Direct 2,050 6,580 6,778 5,625 7,846
Total Goods Revenue $ 23,711 $ 32,109 $ 24,840 $ 20,610 $ 25,061
Travel and Other Revenue
Third Party and Other $ 11,319 $ 8,398 $ 8,125 $ 7,670 $ 9,703
Direct - - - - -
Total Travel and Other Revenue $ 11,319 $ 8,398 $ 8,125 $ 7,670 $ 9,703
Total Revenue
Third Party and Other Revenue $ 87,612 $ 80,093 $ 71,272 $ 65,978 $ 78,425
Direct Revenue 2,050 6,580 6,778 5,625 7,846
Total Revenue $ 89,662 $ 86,673 $ 78,050 $ 71,603 $ 86,271
Year-over-year growth 20 % 20 % (14 ) % (26 ) % (4 ) %
Year-over-year growth, excluding FX 30 % 23 % (8 ) % (21 ) % 7 %
% of Consolidated Revenue 16 % 14 % 13 % 12 % 14 %
Revenue TTM $ 349,079 $ 363,296 $ 350,984 $ 325,988 $ 322,597
Cost of Revenue
Local Cost of Revenue
Third Party $ 13,313 $ 9,801 $ 5,923 $ 7,962 $ 7,403
Direct - - - - -
Total Local Cost of Revenue $ 13,313 $ 9,801 $ 5,923 $ 7,962 $ 7,403
Goods Cost of Revenue
Third Party $ 5,981 $ 7,264 $ 11,501 $ 5,569 $ 5,685
Direct 4,208 7,228 6,627 6,075 7,360
Total Goods Cost of Revenue $ 10,189 $ 14,492 $ 18,128 $ 11,644 $ 13,045
Travel and Other Cost of Revenue
Third Party and Other $ 2,536 $ 1,832 $ 1,067 $ 1,420 $ 1,451
Direct - - - - -
Total Travel and Other Cost of Revenue $ 2,536 $ 1,832 $ 1,067 $ 1,420 $ 1,451
Total Cost of Revenue
Third Party and Other Cost of Revenue $ 21,830 $ 18,897 $ 18,491 $ 14,951 $ 14,539
Direct Cost of Revenue 4,208 7,228 6,627 6,075 7,360
Total Cost of Revenue $ 26,038 $ 26,125 $ 25,118 $ 21,026 $ 21,899
% of Rest of World Total Revenue 29 % 30 % 32 % 29 % 25 %
Gross Profit
Local Gross Profit
Third Party $ 41,319 $ 36,365 $ 39,162 $ 35,361 $ 44,104
Direct - - - - -
Total Local Gross Profit $ 41,319 $ 36,365 $ 39,162 $ 35,361 $ 44,104
% of Rest of World Total Local Revenue 75.6 % 78.8 % 86.9 % 81.6 % 85.6 %
% of Rest of World Total Local Gross Billings 28.5 % 28.2 % 32.6 % 30.8 % 37.3 %
Goods Gross Profit
Third Party $ 15,680 $ 18,265 $ 6,561 $ 9,416 $ 11,530
Direct (2,158 ) (648 ) 151 (450 ) 486
Total Goods Gross Profit $ 13,522 $ 17,617 $ 6,712 $ 8,966 $ 12,016
% of Rest of World Total Goods Revenue 57.0 % 54.9 % 27.0 % 43.5 % 47.9 %
% of Rest of World Total Goods Gross Billings 17.7 % 18.3 % 8.6 % 12.4 % 15.2 %
Travel and Other Gross Profit
Third Party and Other $ 8,783 $ 6,566 $ 7,058 $ 6,250 $ 8,252
Direct - - - - -
Total Travel and Other Gross Profit $ 8,783 $ 6,566 $ 7,058 $ 6,250 $ 8,252
% of Rest of World Total Travel and Other Revenue 77.6 % 78.2 % 86.9 % 81.5 % 85.0 %
% of Rest of World Total Travel and Other Gross Billings 18.2 % 14.9 % 19.4 % 19.3 % 22.3 %
Total Gross Profit
Third Party and Other $ 65,782 $ 61,196 $ 52,781 $ 51,027 $ 63,886
Direct (2,158 ) (648 ) 151 (450 ) 486
Total Gross Profit $ 63,624 $ 60,548 $ 52,932 $ 50,577 $ 64,372
% of Rest of World Total Revenue 71.0 % 69.9 % 67.8 % 70.6 % 74.6 %
% of Rest of World Total Gross Billings 23.6 % 22.5 % 22.6 % 23.1 % 27.5 %
Operating Loss Excl SBC, Acq-Related $ (17,712 ) $ (12,105 ) $ (24,389 ) $ (14,173 ) $ (1,619 )
Year-over-year growth (62 ) % (68 ) % 174 % (331 ) % 91 %
% of Consolidated Operating Income Excl SBC, Acq-Related (35 ) % (88 ) % (48 ) % (24 ) % (4 ) %
Operating Margin Excl SBC, Acq-Related (% of Rest of World Total revenue) (19.8 ) % (14.0 ) % (31.2 ) % (19.8 ) % (1.9 ) %
Year-over-year growth (bps) 4,222 3,848 (2,139 ) (1,640 ) 1,790
Operating Loss TTM Excl SBC, Acq-Related $ (67,914 ) $ (42,016 ) $ (57,495 ) $ (68,379 ) $ (52,286 )
Operating Margin TTM Excl SBC, Acq-Related (% of Rest of World Total TTM revenue) (19.5 ) % (11.6 ) % (16.4 ) % (21.0 ) % (16.2 ) %
Year-over-year growth (bps)(6) N/A N/A 3,590 788 330
Consolidated Results of Operations
Gross Billings
Local Gross Billings
Third Party $ 677,337 $ 799,153 $ 829,553 $ 805,508 $ 727,191
Direct 6,450 - - 693 1,040
Total Local Gross Billings $ 683,787 $ 799,153 $ 829,553 $ 806,201 $ 728,231
Goods Gross Billings
Third Party $ 236,972 $ 316,327 $ 230,030 $ 247,688 $ 244,355
Direct 138,538 225,176 162,294 189,183 199,032
Total Goods Gross Billings $ 375,510 $ 541,503 $ 392,324 $ 436,871 $ 443,387
Travel and Other Gross Billings
Third Party and Other $ 158,959 $ 179,796 $ 185,892 $ 170,734 $ 171,030
Direct - - - - -
Total Travel and Other Gross Billings $ 158,959 $ 179,796 $ 185,892 $ 170,734 $ 171,030
Total Gross Billings
Third Party and Other $ 1,073,268 $ 1,295,276 $ 1,245,475 $ 1,223,930 $ 1,142,576
Direct 144,988 225,176 162,294 189,876 200,072
Total Gross Billings $ 1,218,256 $ 1,520,452 $ 1,407,769 $ 1,413,806 $ 1,342,648
Year-over-year growth 5 % 24 % 4 % 10 % 10 %
Year-over-year growth, excluding FX 11 % 25 % 5 % 11 % 11 %
Gross Billings (TTM) $ 5,090,600 $ 5,380,184 $ 5,433,153 $ 5,560,283 $ 5,684,675
Year-over-year growth 61 % 35 % 16 % 11 % 12 %
Revenue
Local Revenue
Third Party $ 299,177 $ 287,288 $ 327,393 $ 326,921 $ 301,144
Direct 6,450 - - 693 1,040
Total Local Revenue $ 305,627 $ 287,288 $ 327,393 $ 327,614 $ 302,184
Goods Revenue
Third Party $ 84,374 $ 86,579 $ 67,081 $ 52,574 $ 53,222
Direct 138,538 225,175 162,294 189,183 199,032
Total Goods Revenue $ 222,912 $ 311,754 $ 229,375 $ 241,757 $ 252,254
Travel and Other Revenue
Third Party and Other $ 40,013 $ 39,260 $ 44,634 $ 39,376 $ 40,621
Direct - - - - -
Total Travel and Other Revenue $ 40,013 $ 39,260 $ 44,634 $ 39,376 $ 40,621
Total Revenue
Third Party and Other Revenue $ 423,564 $ 413,127 $ 439,108 $ 418,871 $ 394,987
Direct Revenue 144,988 225,175 162,294 189,876 200,072
Total Revenue $ 568,552 $ 638,302 $ 601,402 $ 608,747 $ 595,059
Year-over-year growth 32 % 30 % 8 % 7 % 5 %
Year-over-year growth, excluding FX 38 % 31 % 8 % 8 % 6 %
Total Consolidated Revenue TTM  $ 2,188,334 $ 2,334,472 $ 2,376,591 $ 2,417,003 $ 2,443,510
Year-over-year growth 70 % 45 % 27 % 18 % 12 %
Cost of Revenue
Local Cost of Revenue
Third Party $ 36,905 $ 43,626 $ 46,030 $ 38,678 $ 36,642
Direct 5,231 - - 636 1,887
Total Local Cost of Revenue $ 42,136 $ 43,626 $ 46,030 $ 39,314 $ 38,529
Goods Cost of Revenue
Third Party $ 11,977 $ 14,493 $ 17,856 $ 10,796 $ 10,137
Direct 122,382 218,567 152,377 167,910 179,549
Total Goods Cost of Revenue $ 134,359 $ 233,060 $ 170,233 $ 178,706 $ 189,686
Travel and Other Cost of Revenue
Third Party and Other $ 5,291 $ 5,786 $ 6,130 $ 6,033 $ 7,222
Direct - - - - -
Total Travel and Other Cost of Revenue $ 5,291 $ 5,786 $ 6,130 $ 6,033 $ 7,222
Total Cost of Revenue
Third Party and Other Cost of Revenue $ 54,173 $ 63,905 $ 70,016 $ 55,507 $ 54,001
Direct Cost of Revenue 127,613 218,567 152,377 168,546 181,436
Total Cost of Revenue $ 181,786 $ 282,472 $ 222,393 $ 224,053 $ 235,437
% of Total Consolidated Revenue 32 % 44 % 37 % 37 % 40 %
Gross Profit
Local Gross Profit
Third Party $ 262,272 $ 243,662 $ 281,363 $ 288,243 $ 264,502
Direct 1,219 - - 57 (847 )
Total Local Gross Profit $ 263,491 $ 243,662 $ 281,363 $ 288,300 $ 263,655
% of Total Consolidated Local Revenue 86.2 % 84.8 % 85.9 % 88.0 % 87.2 %
% of Total Consolidated Local Gross Billings 38.5 % 30.5 % 33.9 % 35.8 % 36.2 %
Goods Gross Profit
Third Party $ 72,397 $ 72,086 $ 49,225 $ 41,778 $ 43,085
Direct 16,156 6,608 9,917 21,273 19,483
Total Goods Gross Profit $ 88,553 $ 78,694 $ 59,142 $ 63,051 $ 62,568
% of Total Consolidated Goods Revenue 39.7 % 25.2 % 25.8 % 26.1 % 24.8 %
% of Total Consolidated Goods Gross Billings 23.6 % 14.5 % 15.1 % 14.4 % 14.1 %
Travel and Other Gross Profit
Third Party and Other $ 34,722 $ 33,474 $ 38,504 $ 33,343 $ 33,399
Direct - - - - -
Total Travel and Other Gross Profit $ 34,722 $ 33,474 $ 38,504 $ 33,343 $ 33,399
% of Total Consolidated Travel and Other Revenue 86.8 % 85.3 % 86.3 % 84.7 % 82.2 %
% of Total Consolidated Travel and Other Gross Billings 21.8 % 18.6 % 20.7 % 19.5 % 19.5 %
Total Gross Profit
Third Party and Other $ 369,391 $ 349,222 $ 369,092 $ 363,364 $ 340,986
Direct 17,375 6,608 9,917 21,330 18,636
Total Gross Profit $ 386,766 $ 355,830 $ 379,009 $ 384,694 $ 359,622
% of Total Consolidated Revenue 68.0 % 55.7 % 63.0 % 63.2 % 60.4 %
% of Total Consolidated Gross Billings 31.7 % 23.4 % 26.9 % 27.2 % 26.8 %
Operating Income Excl SBC, Acq-Related $ 50,488 $ 13,703 $ 51,153 $ 59,043 $ 39,153
Year-over-year growth N/A (24 ) % (24 ) % (18 ) % (22 ) %
Operating Margin Excl SBC, Acq-Related (% of Total Consolidated revenue) 8.9 % 2.1 % 8.5 % 9.7 % 6.6 %
Year-over-year growth (bps) 930 (150 ) (360 ) (300 ) (230 )
Operating Income TTM Excl SBC, Acq-Related $ 207,964 $ 203,715 $ 187,278 $ 174,387 $ 163,052
Operating Margin TTM Excl SBC, Acq-Related (% of Total Consolidated TTM revenue) 9.5 % 8.7 % 7.9 % 7.2 % 6.7 %
Year-over-year growth (bps) 3,320 1,770 680 (40 ) (280 )
Operating Income (Loss) $ 25,438 $ (12,861 ) $ 21,178 $ 27,412 $ 13,812
Year-over-year growth N/A 14 % (47 ) % (41 ) % (46 ) %
Operating Margin (% of Total Consolidated revenue) 4.5 % (2.0 ) % 3.5 % 4.5 % 2.3 %
Year-over-year growth (bps) 457 100 (360 ) (370 ) (220 )
Operating Income TTM $ 96,590 $ 98,701 $ 80,240 $ 61,167 $ 49,541
Operating Margin TTM (% of Total Consolidated TTM revenue) 4.4 % 4.2 % 3.4 % 2.5 % 2.0 %
Year-over-year growth (bps) 4,740 1,870 750 (100 ) (240 )
Net Loss Attributable to Common Stockholders (2,979 ) (81,089 ) (3,992 ) (7,574 ) (2,580 )
Weighted Average Basic Shares Outstanding 653,224 655,678 658,800 662,361 666,433
Weighted Average Diluted Shares Outstanding (7) 653,224 655,678 658,800 662,361 666,433
Net Loss per Share
Basic $ (0.00 ) $ (0.12 ) $ (0.01 ) $ (0.01 ) $ (0.00 )
Diluted $ (0.00 ) $ (0.12 ) $ (0.01 ) $ (0.01 ) $ (0.00 )
The following is a quarterly reconciliation of Adjusted EBITDA to the most comparable U.S. GAAP financial measure, “Net loss” and a quarterly reconciliation of operating income, excluding stock-based compensation and acquisition-related (expense) benefit, net, to the most comparable U.S. GAAP financial measure, “Operating income (loss).” (8)
Adjusted EBITDA $ 65,798 $ 29,668 $ 71,853 $ 80,511 $ 62,302
Depreciation and amortization (15,310 ) (15,965 ) (20,700 ) (21,468 ) (23,149 )
Operating income, excluding stock-based compensation and acquisition-related (expense) benefit, net 50,488 13,703 51,153 59,043 39,153
Stock-based compensation (22,619 ) (26,411 ) (29,907 ) (32,446 ) (26,870 )
Acquisition-related (expense) benefit, net (2,431 ) (153 ) (68 ) 815 1,529
Operating income (loss) 25,438 (12,861 ) 21,178 27,412 13,812
Non Operating Items
Loss on equity method investments (138 ) (1,231 ) (19 ) (14 ) (25 )
Other income (expense), net 617 (48,279 ) (5,064 ) (5,565 ) 857
Provision for income taxes (26,857 ) (17,676 ) (19,337 ) (27,384 ) (15,936 )
Net loss $ (940 ) $ (80,047 ) $ (3,242 ) $ (5,551 ) $ (1,292 )
The following is a trailing twelve months reconciliation of Operating income, excluding stock-based compensation and acquisition-related (expense) benefit, net, to the most comparable U.S. GAAP financial measure, “Operating Income.” (8)
Operating income, excluding stock-based compensation and acquisition-related (expense) benefit, net TTM $ 207,964 $ 203,715 $ 187,278 $ 174,387 $ 163,052
Stock-based compensation (110,374 ) (104,117 ) (106,021 ) (111,383 ) (115,634 )
Acquisition-related (expense) benefit, net (1,000 ) (897 ) (1,017 ) (1,837 ) 2,123
Operating income TTM $ 96,590 $ 98,701 $ 80,240 $ 61,167 $ 49,541
The following is a quarterly reconciliation of foreign exchange rate neutral Gross Billings growth from the comparable quarterly periods of the prior year to reported Gross Billings growth from the comparable quarterly periods of the prior year.(9)
EMEA Gross Billings growth, excluding FX (13 ) % 4 % (9 ) % 4 % 9 %
FX Effect (8 ) % (2 ) % 1 % - % 3 %
EMEA Gross Billings growth (21 ) % 2 % (8 ) % 4 % 12 %
Rest of World Gross Billings growth, excluding FX 15 % 20 % (6 ) % (16 ) % (4 ) %
FX Effect (9 ) % (3 ) % (5 ) % (5 ) % (9 ) %
Rest of World Gross Billings growth 6 % 17 % (11 ) % (21 ) % (13 ) %
Consolidated Gross Billings growth, excluding FX 11 % 25 % 5 % 11 % 11 %
FX Effect (6 ) % (1 ) % (1 ) % (1 ) % (1 ) %
Consolidated Gross Billings growth 5 % 24 % 4 % 10 % 10 %
The following is a quarterly reconciliation of foreign exchange rate neutral Revenue growth from the comparable quarterly periods of the prior year to reported Revenue growth from the comparable quarterly periods of the prior year.(9)
EMEA Revenue growth, excluding FX 6 % (25 ) % (20 ) % (25 ) % (23 ) %
FX Effect (10 ) % (2 ) % - % 1 % 2 %
EMEA Revenue growth (4 ) % (27 ) % (20 ) % (24 ) % (21 ) %
Rest of World Revenue growth, excluding FX 30 % 23 % (8 ) % (21 ) % 7 %
FX Effect (10 ) % (3 ) % (6 ) % (5 ) % (11 ) %
Rest of World Revenue growth 20 % 20 % (14 ) % (26 ) % (4 ) %
Consolidated Revenue growth, excluding FX 38 % 31 % 8 % 8 % 6 %
FX Effect (6 ) % (1 ) % - % (1 ) % (1 ) %
Consolidated Revenue growth 32 % 30 % 8 % 7 % 5 %
The following is a reconciliation of free cash flow to the most comparable U.S. GAAP financial measure, “Net cash provided by operating activities.”
Net cash provided by (used in) operating activities $ 42,088 $ 65,717 $ 8,760 $ 43,302 $ (11,905 )
Purchases of property and equipment and capitalized software (16,010 ) (40,034 ) (14,468 ) (14,042 ) (15,064 )
Free cash flow (10) $ 26,078 $ 25,683 $ (5,708 ) $ 29,260 $ (26,969 )
Net cash provided by operating activities (TTM) $ 370,194 $ 266,834 $ 191,880 $ 159,867 $ 105,874
Purchases of property and equipment and capitalized software (TTM) (69,788 ) (95,836 ) (97,221 ) (84,554 ) (83,608 )
Free cash flow (TTM) $ 300,406 $ 170,998 $ 94,659 $ 75,313 $ 22,266
Net cash used in investing activities $ (35,629 ) $ (52,753 ) $ (30,679 ) $ (15,862 ) $ (26,444 )
Net cash provided by (used in) financing activities $ 2,707 $ (6,495 ) $ (9,342 ) $ (7,941 ) $ (8,970 )
Net cash used in investing activities (TTM) $ (177,133 ) $ (194,979 ) $ (179,214 ) $ (134,923 ) $ (125,738 )
Net cash provided by (used in) financing activities (TTM) $ 765,503 $ 12,095 $ 11,028 $ (21,071 ) $ (32,748 )
Other Metrics
Active Customers (11)
North America 16.0 17.2 18.2 19.1 19.9
EMEA 14.4 14.3 14.0 13.9 14.0
Rest of World 9.1 9.5 9.5 9.6 9.6
Total Active Customers 39.5 41.0 41.7 42.6 43.5
TTM Gross Billings / Average Active Customer (12)
North America $ 148 $ 152 $ 151 $ 156 $ 155
EMEA $ 160 $ 146 $ 137 $ 135 $ 137
Rest of World $ 133 $ 126 $ 116 $ 108 $ 102
Consolidated $ 149 $ 144 $ 138 $ 138 $ 137
Headcount
Sales (13) 5,087 4,677 4,566 4,679 4,801
% North America 24 % 25 % 28 % 26 % 28 %
% EMEA 43 % 42 % 38 % 39 % 37 %
% Rest of World 33 % 33 % 34 % 35 % 35 %
Other 6,779 6,717 6,433 6,306 6,453
Total Headcount 11,866 11,394 10,999 10,985 11,254
(1) Represents the total dollar value of customer purchases of goods and services, excluding any applicable taxes and net of estimated refunds. Includes direct billings and third party and other billings.
(2) Local represents deals from local merchants, deals with national merchants, and deals through local events (i.e., GrouponLive deals).
(3) Third party revenue is related to sales for which the Company acts as a marketing agent for the merchant. This revenue is recorded on a net basis. Direct revenue is primarily related to the sale of products for which the Company is the merchant of record. These revenues are accounted for on a gross basis, with the cost of inventory included in cost of revenue.
(4) Cost of revenue is comprised of direct and certain indirect costs incurred to generate revenue. Direct cost of revenue includes the cost of inventory, shipping and fulfillment costs and inventory markdowns. Third party cost of revenue includes estimated refunds for which the merchant’s share is not recoverable. Other costs incurred to generate revenue are allocated to cost of third party and other revenue and direct revenue for each of our categories (Local, Goods, and Travel and Other) in proportion to relative gross billings during the period.
(5) Represents the change in financial measures that would have resulted had average exchange rates in the reporting period been the same as those in effect in the prior year period.
(6) International operating margin information broken out between EMEA and Rest of World is not readily available for quarterly periods during the year ended December 31, 2010. Therefore, the Company is presenting year-over-year basis point (bps) growth for operating margin TTM excluding stock-based compensation and acquisition-related expense (benefit), net beginning in the first quarter of 2013.
(7) The weighted-average diluted shares outstanding is calculated using the weighted-average number of common shares and, if dilutive, potential common shares outstanding during the period. Potential common shares consist of the incremental common shares issuable upon the exercise of stock options and vesting of restricted stock units and restricted shares, as calculated using the treasury stock method.
(8) Adjusted EBITDA and Operating income excluding stock-based compensation and acquisition-related (expense) benefit, net are non-GAAP financial measures. The Company reconciles Adjusted EBITDA to the most comparable U.S. GAAP financial measure, “Net loss” for the periods presented, and the Company reconciles Operating income excluding stock-based compensation and acquisition-related (expense) benefit, net to the most comparable U.S. GAAP financial measure, “Operating income (loss),” for the periods presented.
(9) Foreign Exchange Rate neutral operating results are non-GAAP financial measures. The Company reconciles “foreign exchange rate neutral Gross Billings growth” and “foreign exchange rate neutral Revenue growth” to year-over-year growth rates for the most comparable U.S. GAAP financial measures, “Gross Billings” and “Revenue,” respectively for the periods presented.
(10) Free cash flow is a non-GAAP financial measure. The Company reconciles this measure to the most comparable U.S. GAAP financial measure, “Net cash provided by (used in) operating activities,” for the periods presented.
(11) Reflects the total number of unique user accounts who have purchased a Groupon during the trailing twelve months.
(12) Reflects the total gross billings generated in the trailing twelve months per average active customer over that period.
(13) Includes inside and outside merchant sales representatives, as well as sales support.
(14) The definition, methodology, and appropriateness of each of our supplemental metrics is reviewed periodically. As a result, metrics are subject to removal and/or change.

 

Groupon, Inc.

Groupon Announces Q3 Earnings, Ticket Monster Acquisition
Comments Off
Top Rated White Papers and Resources

Comments are closed.