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Groupon Earnings Released: ‘We Had A Record Quarter’

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Groupon Earnings Released: ‘We Had A Record Quarter’
[ Finance]

Groupon just released its earnings report for the first quarter with gross billings of $1.82 billion and revenue of $757.6 million.

Gross billings (the total dollar value of customer purchases of goods and services, excluding applicable taxes and net of estimated refunds) were up 29% year-over-year. Those in North America increased 15%.

Revenue was up 26% year-over-year, and up 27% in North America.

CEO Eric Lefkofsky writes, “We had a record quarter in terms of demand, with worldwide billings increasing 29% and reaching their highest level ever. Our marketplace continued to gain traction and growth in our mobile business accelerated, with more than 10 million app downloads this quarter and mobile transactions reaching 54% in March.”

“We’re on track with our plans in 2014 to invest in the growth of Local, improve our Goods margins, and drive profitability in our International operations,” he added. “As a result, we have further confidence in our results for the back half of the year, and have increased our full year outlook.”

Here’s the release in its entirety:

CHICAGO–()–Groupon, Inc. (NASDAQ: GRPN) today announced financial results for the quarter ended March 31, 2014.

“Net cash provided by (used in) operating activities.”

“We had a record quarter in terms of demand, with worldwide billings increasing 29% and reaching their highest level ever,” said Eric Lefkofsky, CEO of Groupon. “Our marketplace continued to gain traction and growth in our mobile business accelerated, with more than 10 million app downloads this quarter and mobile transactions reaching 54% in March.”

“We’re on track with our plans in 2014 to invest in the growth of Local, improve our Goods margins, and drive profitability in our International operations. As a result, we have further confidence in our results for the back half of the year, and have increased our full year outlook.”

First Quarter 2014 Summary

  • Gross billings, which reflect the total dollar value of customer purchases of goods and services, excluding applicable taxes and net of estimated refunds, increased 29% globally to $1.82 billion in the first quarter 2014, compared with $1.41 billion in the first quarter 2013. North America billings increased 15%, EMEA increased 4% and Rest of World increased 123%, driven by the acquisition of Ticket Monster.
  • Revenue increased 26%, to $757.6 million in the first quarter 2014, compared with $601.4 million in the first quarter 2013. North America revenue increased 27%, EMEA increased 26% and Rest of World increased 23%.
  • Gross profit increased 2%, to $385.7 million in the first quarter 2014, compared with $379.0 million in the first quarter 2013.
  • Adjusted EBITDA, a non-GAAP financial measure, was $40.3 million in the first quarter 2014, compared with $71.9 million in the first quarter 2013, reflecting a $29.4 million increase in marketing expense.
  • First quarter 2014 net loss attributable to common stockholders was $37.8 million, or $0.06 per share, including stock compensation, amortization of acquired intangible assets, and acquisition-related costs, net, of $38.2 million ($29.8 million net of tax). Loss per share excluding stock compensation, amortization of acquired intangible assets, and acquisition-related costs, net of tax, a non-GAAP financial measure, was $0.01 per share.
  • Operating cash flow for the trailing twelve months ended March 31, 2014 was $189.0 million. Free cash flow, a non-GAAP financial measure, was negative $37.1 million in the first quarter 2014, bringing free cash flow for the trailing twelve months ended March 31, 2014 to $123.6 million.
  • At the end of the quarter, Groupon had $1.0 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.

Highlights

  • Units: Global units, defined as vouchers and products sold before cancellations and refunds, increased 85% year-over-year to 84 million in the first quarter 2014. North America units increased 14%, EMEA units increased 18% and Rest of World units increased 330%.
  • Active deals: At the end of the first quarter 2014, on average, active deals were over 200,000 globally, compared with more than 140,000 at the end of the fourth quarter 2013. North American active deals increased to over 95,000.
  • Active customers: Active customers, or customers that have purchased a voucher or product within the last twelve months, grew 24% year-over-year, to 51.8 million as of March 31, 2014, comprising 21.8 million in North America, 14.5 million in EMEA, and 15.5 million in Rest of World.
  • Customer spend: First quarter 2014 trailing twelve month billings per average active customer was $132, compared with $134 in the fourth quarter 2013.
  • Mobile: In March 2014, 54% of global transactions were completed on mobile devices. Over 80 million people have now downloaded Groupon mobile apps worldwide, with over 10 million people downloading them in the first quarter alone.
  • Marketplace: The rollout of Groupon’s marketplace (“Pull”) continued to gain traction. In March 2014, approximately 9% of total traffic in North America searched, with customers that searched spending significantly more than those that did not.

Share Repurchase Program

During the first quarter 2014, Groupon repurchased 3,075,700 shares of its Class A common stock under its share repurchase authorization at an average price of $9.58 per share, for an aggregate purchase price of $29.5 million. Under the existing authorization, Groupon has repurchased a total of 7,508,500 shares at an average price of $10.13 per share, for an aggregate purchase price of $76.0 million. Groupon is authorized to repurchase up to an additional $224.0 million of Class A common stock under the August 2013 share repurchase authorization. The program, which is intended to partially offset dilution from employee stock grants, terminates in August 2015.

Outlook

In the second quarter 2014, Groupon expects continued investment to accelerate long-term growth worldwide. As a result, for the second quarter 2014, the Company expects revenue of between $725 million and $775 million, Adjusted EBITDA of between $45 million and $65 million, and non-GAAP earnings per share excluding stock compensation, amortization of acquired intangible assets, and acquisition-related expenses, net of tax, of between $0.00 and $0.02.

Groupon is increasing its full year outlook, and now expects Adjusted EBITDA to exceed $300 million.

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 at http://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, Adjusted EBITDA, free cash flow and loss per share excluding stock-based compensation, amortization of acquired intangible assets, and acquisition-related expense (benefit), net. 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 is comprised of the change in the fair value of contingent consideration arrangements and, beginning in the fourth quarter of 2013, also includes external transaction costs related to business combinations, primarily consisting of legal and advisory fees. External transaction costs were not material for periods prior to the fourth quarter of 2013 presented in this release and the accompanying tables. 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 expenses because they are 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 prior-year period.

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. Our definition of Adjusted EBITDA may differ from similar measures used by other companies, even when similar terms are used to identify such measures. Adjusted EBITDA is a key measure used by our management and Board of Directors to evaluate operating performance, generate future plans and make strategic decisions regarding the allocation of capital. Accordingly, we believe that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and Board of Directors.

Earnings per share excluding stock-based compensation, amortization of acquired intangible assets, 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, amortization of acquired intangible assets, and acquisition-related expense (benefit), net, and the income tax effect of those items. We believe that this non-GAAP financial measure provides useful supplemental information for evaluating our operating performance.

Beginning in the first quarter 2014, we have changed our non-GAAP earnings (loss) per share measure to exclude amortization of acquired intangible assets, net of tax, in addition to stock compensation and acquisition-related expenses, which we have excluded historically. Given the significant acquisition activity in January 2014 and potential acquisition activity in the future, we believe that excluding non-cash amortization of acquired intangible assets from our non-GAAP earnings per share measure enables more meaningful comparisons with our historical results.

Free cash flow is a non-GAAP financial measure that comprises net cash provided by (used in) 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, the full year 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 and adding high quality merchants; cyber security breaches; incurring expenses as we expand our business; competing against smaller competitors and competitors with more financial resources than us; maintaining favorable terms with our business partners; maintaining a strong brand; managing inventory and order fulfillment risks; 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; protecting our intellectual property; handling acquisitions, joint ventures and strategic investments effectively; seasonality; payment-related risks; customer and merchant 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 at http://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 May 6, 2014. 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 of local commerce and the place you start when you want to buy just about anything, anytime, anywhere. By leveraging the company’s global relationships and scale, Groupon offers consumers a vast marketplace of unbeatable deals all over the world. Shoppers discover the best a city has to offer on the web or on mobile with Groupon Local, enjoy vacations with Groupon Getaways, and find a curated selection of electronics, fashion, home furnishings and more with Groupon Goods.

Groupon is redefining how traditional small businesses attract, retain and interact with customers by providing merchants with a suite of products and services, including customizable deal campaigns, credit card payment processing capabilities, and point-of-sale solutions that help businesses grow and operate more effectively. To search for great deals or subscribe to Groupon emails, visitwww.Groupon.com. To download Groupon’s five-star mobile apps, visit www.groupon.com/mobile. 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 Y/Y %
March 31, Growth
Y/Y %   excluding
2014 2013 Growth FX Effect(2) FX(2)
Gross Billings (1):
North America $ 781,769 $ 681,319 14.7 % $ (844 ) 14.9 %
EMEA 513,588 492,318 4.3 % 14,983 1.3 %
Rest of World 521,854 234,132 122.9 % (24,621 ) 133.4 %
Consolidated billings $ 1,817,211 $ 1,407,769 29.1 % $ (10,482 ) 29.8 %
Revenue:
North America $ 431,062 $ 339,554 26.9 % $ (288 ) 27.0 %
EMEA 230,893 183,798 25.6 % 6,841 21.9 %
Rest of World 95,682 78,050 22.6 % (9,417 ) 34.7 %
Consolidated revenue $ 757,637 $ 601,402 26.0 % $ (2,864 ) 26.5 %
(Loss) income from operations $ (19,953 ) $ 21,178 (194.2 ) % $ 1,685 (202.2 ) %
Net loss attributable to Groupon, Inc. $ (37,795 ) $ (3,992 )
Net loss per share:
Basic $ (0.06 ) $ (0.01 )
Diluted $ (0.06 ) $ (0.01 )
Weighted average number of shares outstanding:
Basic 682,378,690 658,800,417
Diluted 682,378,690 658,800,417
(1) Represents the total dollar value of customer purchases of goods and services, excluding 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 months ended March 31, 2013.
Groupon, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Three Months Ended
March 31,
2014 2013
Operating activities
Net loss $ (35,363 ) $ (3,242 )
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization of property, equipment and software 22,092 15,114
Amortization of acquired intangible assets 12,648 5,586
Stock-based compensation 23,729 29,907
Deferred income taxes 573 (258 )
Excess tax benefits on stock-based compensation (5,855 ) (832 )
(Gain) loss on equity method investments (52 ) 19
(Gain) loss, net from changes in fair value of contingent consideration (39 ) 68
Impairment of cost method investment 397 -
Change in assets and liabilities, net of acquisitions:
Restricted cash 2,950 2,523
Accounts receivable (24,393 ) (7,684 )
Prepaid expenses and other current assets (5,150 ) 12,527
Accounts payable 7,315 (19,606 )
Accrued merchant and supplier payables (23,649 ) (39,417 )
Accrued expenses and other current liabilities (5,379 ) 13,302
Other, net 9,459 753
Net cash (used in) provided by operating activities (20,717 ) 8,760
Net cash used in investing activities (138,608 ) (30,679 )
Net cash used in financing activities (41,492 ) (9,342 )
Effect of exchange rate changes on cash and cash equivalents (831 ) (12,378 )
Net decrease in cash and cash equivalents (201,648 ) (43,639 )
Cash and cash equivalents, beginning of period 1,240,472 1,209,289
Cash and cash equivalents, end of period $ 1,038,824 $ 1,165,650
Groupon, Inc.
Consolidated Statements of Operations
(in thousands, except share and per share amounts)
(unaudited)
Three Months Ended March 31,
2014 2013
Revenue:
Third party and other $ 426,429 $ 439,108
Direct 331,208 162,294
Total revenue 757,637 601,402
Cost of revenue:
Third party and other 62,351 70,016
Direct 309,565 152,377
Total cost of revenue 371,916 222,393
Gross profit 385,721 379,009
Operating expenses:
Marketing 78,924 49,557
Selling, general and administrative 324,965 308,206
Acquisition-related expense, net 1,785 68
Total operating expenses 405,674 357,831
(Loss) income from operations (19,953 ) 21,178
Other expense, net (840 ) (5,083 )
(Loss) income before provision for income taxes (20,793 ) 16,095
Provision for income taxes 14,570 19,337
Net loss (35,363 ) (3,242 )
Net income attributable to noncontrolling interests (2,432 ) (750 )
Net loss attributable to Groupon, Inc. $ (37,795 ) $ (3,992 )
Net loss per share
Basic $ (0.06 ) $ (0.01 )
Diluted $ (0.06 ) $ (0.01 )
Weighted average number of shares outstanding
Basic 682,378,690 658,800,417
Diluted 682,378,690 658,800,417
Groupon, Inc.
Consolidated Balance Sheets
(in thousands, except share and per share amounts)
March 31, 2014 December 31, 2013
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 1,038,824 $ 1,240,472
Accounts receivable, net 125,527 83,673
Deferred income taxes 29,897 27,938
Prepaid expenses and other current assets 234,102 210,415
Total current assets 1,428,350 1,562,498
Property, equipment and software, net 159,649 134,423
Goodwill 447,370 220,827
Intangible assets, net 140,738 28,443
Investments 24,450 20,652
Deferred income taxes, non-current 44,559 35,941
Other non-current assets 35,490 39,226
Total Assets $ 2,280,606 $ 2,042,010
Liabilities and Equity
Current liabilities:
Accounts payable $ 45,524 $ 27,573
Accrued merchant and supplier payables 816,329 752,943
Accrued expenses 253,015 226,986
Deferred income taxes 48,368 47,558
Other current liabilities 134,315 132,718
Total current liabilities 1,297,551 1,187,778
Deferred income taxes, non-current 12,331 10,853
Other non-current liabilities 147,197 131,697
Total Liabilities 1,457,079 1,330,328
Commitments and contingencies
Stockholders’ Equity
Class A common stock, par value $0.0001 per share, 2,000,000,000 shares authorized, 687,288,634
shares issued and 679,780,134 shares outstanding at March 31, 2014 and 670,149,976 shares issued and
665,717,176 shares outstanding at December 31, 2013 69 67
Class B common stock, par value $0.0001 per share, 10,000,000 shares authorized, 2,399,976 shares
issued and outstanding at March 31, 2014 and December 31, 2013 - -
Common stock, par value $0.0001 per share, 2,010,000,000 shares authorized, no shares issued and
outstanding at March 31, 2014 and December 31, 2013 - -
Additional paid-in capital 1,768,271 1,584,211
Treasury stock, at cost, 7,508,500 shares at March 31, 2014 and 4,432,800 shares at December 31, 2013 (76,048 ) (46,587 )
Accumulated deficit (886,665 ) (848,870 )
Accumulated other comprehensive income 20,020 24,830
Total Groupon, Inc. Stockholders’ Equity 825,647 713,651
Noncontrolling interests (2,120 ) (1,969 )
Total Equity 823,527 711,682
Total Liabilities and Equity $ 2,280,606 $ 2,042,010
Groupon, Inc.
Segment Information
(in thousands)
(unaudited)
Three Months Ended March 31,
2014 2013
North America
Gross billings (1) $ 781,769 $ 681,319
Revenue $ 431,062 $ 339,554
Segment cost of revenue and operating expenses(2) 419,677 298,188
Segment operating income(2) $ 11,385 $ 41,366
Segment operating income as a percent of segment revenue 2.6 % 12.2 %
EMEA
Gross billings (1) $ 513,588 $ 492,318
Revenue $ 230,893 $ 183,798
Segment cost of revenue and operating expenses(2) 211,970 149,622
Segment operating income(2) $ 18,923 $ 34,176
Segment operating income as a percent of segment revenue 8.2 % 18.6 %
Rest of World
Gross billings (1) $ 521,854 $ 234,132
Revenue $ 95,682 $ 78,050
Segment cost of revenue and operating expenses(2) 120,429 102,439
Segment operating loss(2) $ (24,747 ) $ (24,389 )
Segment operating loss as a percent of segment revenue (25.9 ) % (31.2 ) %
(1) Represents the total dollar value of customer purchases of goods and services, excluding 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 expense (benefit), net.
Groupon, Inc.
Non-GAAP Reconciliation Schedules
(in thousands, except share and per share amounts)
(unaudited)
Adjusted EBITDA and earnings (loss) per share excluding stock-based compensation, amortization of acquired intangible assets and acquisition-related expense, 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 earnings (loss) per share excluding stock-based compensation, amortization of acquired intangible assets and acquisition-related expense, net to the most comparable U.S. GAAP financial measure, “Diluted net earnings (loss) per share” for the period presented.
The following is a quarterly reconciliation of Adjusted EBITDA to the most comparable U.S. GAAP financial measure, “Net loss.”
Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014
Net loss $ (3,242 ) $ (5,551 ) $ (1,292 ) $ (78,861 ) $ (35,363 )
Adjustments:
Stock-based compensation 29,907 32,446 26,870 32,239 23,729
Acquisition-related expense (benefit), net 68 (815 ) (1,529 ) 2,265 1,785
Depreciation and amortization 20,700 21,468 23,149 24,132 34,740
Other expense (income), net 5,083 5,579 (832 ) 84,833 840
Provision for income taxes 19,337 27,384 15,936 7,380 14,570
Total adjustments 75,095 86,062 63,594 150,849 75,664
Adjusted EBITDA $ 71,853 $ 80,511 $ 62,302 $ 71,988 $ 40,301
The following is a reconciliation of diluted net loss per share to diluted loss per share excluding stock-based compensation, amortization of acquired intangible assets and acquisition-related expense, net for the three months ended March 31, 2014:
Three Months Ended
March 31, 2014
Net loss attributable to Groupon, Inc. $ (37,795 )
Stock-based compensation 23,729
Amortization of acquired intangible assets 12,648
Acquisition-related expense, net 1,785
Income tax effect of adjustments (8,377 )
Net loss attributable to common stockholders excluding stock-based compensation,
amortization of acquired intangible assets and acquisition-related expense, net $ (8,010 )
Diluted shares 682,378,690
Incremental diluted shares (1) -
Adjusted diluted shares 682,378,690
Diluted net loss per share $ (0.06 )
Impact of stock-based compensation, amortization of acquired intangible assets
and acquisition-related expense, net 0.05
Diluted loss per share excluding stock-based compensation, amortization of acquired intangible assets
and acquisition-related expense, net $ (0.01 )
(1) Outstanding equity awards are not reflected in the calculation for the three months ended March 31, 2014 because the effect would be antidilutive.
Foreign exchange rate neutral operating results are non-GAAP financial measures. The Company reconciles foreign exchange rate neutral operating results to the most comparable U.S. GAAP financial measures, “Gross billings,” “Revenue” and “(Loss) income from operations,” respectively, for the periods presented. The Company reconciles “foreign exchange rage 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.
The effect of the Company’s gross billings, revenue and (loss) income from operations from changes in exchange rates versus the U.S. Dollar for the three months ended March 31, 2014 was as follows:
Three Months Ended March 31, 2014 Three Months Ended March 31, 2014
At Avg. Exchange At Avg. Exchange
Q1 2013 Rate As Q4 2013 Rate As
Rates (1) Effect (2) Reported Rates (3) Effect (2) Reported
Gross billings $ 1,827,693 $ (10,482 ) $ 1,817,211 $ 1,825,844 $ (8,633 ) $ 1,817,211
Revenue $ 760,501 $ (2,864 ) $ 757,637 $ 759,885 $ (2,248 ) $ 757,637
(Loss) income from operations $ (21,638 ) $ 1,685 $ (19,953 ) $ (20,777 ) $ 824 $ (19,953 )
(1) Represents the financial statement balances that would have resulted had average exchange rates in the reporting period been the same as those in effect during the three months ended March 31, 2013.
(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 reporting period been the same as those in effect during the three months ended December 31, 2013.
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.
Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014
EMEA Gross billings growth, excluding FX (9 ) % 4 % 9 % 3 % 1 %
FX Effect 1 % - % 3 % 3 % 3 %
EMEA Gross billings growth (8 ) % 4 % 12 % 6 % 4 %
Rest of World Gross billings growth, excluding FX (6 ) % (16 ) % (4 ) % (2 ) % 133 %
FX Effect (5 ) % (5 ) % (9 ) % (9 ) % (10 ) %
Rest of World Gross billings growth (11 ) % (21 ) % (13 ) % (11 ) % 123 %
Consolidated Gross billings growth, excluding FX 5 % 11 % 11 % 5 % 30 %
FX Effect (1 ) % (1 ) % (1 ) % - % (1 ) %
Consolidated Gross billings growth 4 % 10 % 10 % 5 % 29 %
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.
Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014
EMEA Revenue growth, excluding FX (20 ) % (25 ) % (23 ) % 38 % 22 %
FX Effect - % 1 % 2 % 5 % 4 %
EMEA Revenue growth (20 ) % (24 ) % (21 ) % 43 % 26 %
Rest of World Revenue growth, excluding FX (8 ) % (21 ) % 7 % (6 ) % 35 %
FX Effect (6 ) % (5 ) % (11 ) % (9 ) % (12 ) %
Rest of World Revenue growth (14 ) % (26 ) % (4 ) % (15 ) % 23 %
Consolidated Revenue growth, excluding FX 8 % 8 % 6 % 20 % 26 %
FX Effect - % (1 ) % (1 ) % - % - %
Consolidated Revenue growth 8 % 7 % 5 % 20 % 26 %
Groupon, Inc.
Supplemental Financial Information and Business Metrics(9)
(financial data in thousands, except per share data; active customers in millions)
(unaudited)
Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014
Segments
North America Segment
Gross Billings (1)
Local (2) Gross Billings $ 450,841 $ 453,030 $ 405,913 $ 439,131 $ 456,952
Goods Gross Billings 165,359 196,878 194,565 286,039 242,896
Travel (2) Gross Billings 65,119 62,297 64,521 63,551 81,921
Total Gross Billings $ 681,319 $ 712,205 $ 664,999 $ 788,721 $ 781,769
Year-over-year growth 23 % 30 % 20 % 10 % 15 %
% Third Party and Other 78 % 74 % 72 % 67 % 70 %
% Direct 22 % 26 % 28 % 33 % 30 %
Gross Billings Trailing Twelve Months (TTM) $ 2,500,915 $ 2,664,845 $ 2,777,475 $ 2,847,244 $ 2,947,694
Revenue (3)
Local Revenue $ 172,294 $ 177,377 $ 162,346 $ 161,601 $ 177,247
Goods Revenue 151,209 186,028 185,914 268,281 237,435
Travel Revenue 16,051 13,777 12,578 13,902 16,380
Total Revenue $ 339,554 $ 377,182 $ 360,838 $ 443,784 $ 431,062
Year-over-year growth 42 % 45 % 24 % 18 % 27 %
% Third Party and Other 56 % 52 % 49 % 41 % 45 %
% Direct 44 % 48 % 51 % 59 % 55 %
Revenue TTM $ 1,266,689 $ 1,383,690 $ 1,452,925 $ 1,521,358 $ 1,612,866
Gross Profit (4)
Local Gross Profit $ 146,379 $ 155,728 $ 138,890 $ 140,944 $ 152,622
% of North America Total Local Gross Billings 32.5 % 34.4 % 34.2 % 32.1 % 33.4 %
Goods Gross Profit 12,456 26,977 21,609 21,030 12,604
% of North America Total Goods Gross Billings 7.5 % 13.7 % 11.1 % 7.4 % 5.2 %
Travel Gross Profit 13,521 11,881 11,070 12,352 14,442
% of North America Total Travel Gross Billings 20.8 % 19.1 % 17.2 % 19.4 % 17.6 %
Total Gross Profit $ 172,356 $ 194,586 $ 171,569 $ 174,326 $ 179,668
Year-over-year growth 2 % 12 % 7 % 15 % 4 %
% Third Party and Other 94 % 88 % 90 % 91 % 94 %
% Direct 6 % 12 % 10 % 9 % 6 %
% of North America Total Gross Billings 25.3 % 27.3 % 25.8 % 22.1 % 23.0 %
EMEA Segment
Gross Billings
Local Gross Billings $ 260,297 $ 241,856 $ 207,803 $ 277,472 $ 262,141
Goods Gross Billings 149,193 167,594 169,849 219,880 183,013
Travel Gross Billings 82,828 72,800 65,666 68,361 68,434
Total Gross Billings $ 492,318 $ 482,250 $ 443,318 $ 565,713 $ 513,588
Year-over-year growth (8 ) % 4 % 12 % 6 % 4 %
Year-over-year growth, excluding FX (5) (9 ) % 4 % 9 % 3 % 1 %
% Third Party and Other 98 % 100 % 98 % 83 % 83 %
% Direct 2 % - % 2 % 17 % 17 %
Gross Billings TTM $ 1,883,265 $ 1,903,136 $ 1,950,367 $ 1,983,599 $ 2,004,869
Revenue
Local Revenue $ 111,589 $ 110,229 $ 92,141 $ 116,061 $ 109,120
Goods Revenue 53,326 35,119 41,279 119,274 106,889
Travel Revenue 18,883 14,614 14,530 15,870 14,884
Total Revenue $ 183,798 $ 159,962 $ 147,950 $ 251,205 $ 230,893
Year-over-year growth (20 ) % (24 ) % (21 ) % 43 % 26 %
Year-over-year growth, excluding FX (20 ) % (25 ) % (23 ) % 38 % 22 %
% Third Party and Other 96 % 99 % 94 % 61 % 61 %
% Direct 4 % 1 % 6 % 39 % 39 %
Revenue TTM $ 758,918 $ 707,325 $ 667,988 $ 742,915 $ 790,010
Gross Profit
Local Gross Profit $ 97,389 $ 99,318 $ 81,808 $ 105,210 $ 100,066
% of EMEA Total Local Gross Billings 37.4 % 41.1 % 39.4 % 37.9 % 38.2 %
Goods Gross Profit 39,974 27,108 28,943 33,526 27,302
% of EMEA Total Goods Gross Billings 26.8 % 16.2 % 17.0 % 15.2 % 14.9 %
Travel Gross Profit 16,358 13,105 12,930 14,457 13,669
% of EMEA Total Travel Gross Billings 19.7 % 18.0 % 19.7 % 21.1 % 20.0 %
Total Gross Profit $ 153,721 $ 139,531 $ 123,681 $ 153,193 $ 141,037
Year-over-year growth (23 ) % (24 ) % (24 ) % 7 % (8 ) %
% Third Party and Other 100 % 101 % 99 % 91 % 92 %
% Direct - % (1 ) % 1 % 9 % 8 %
% of EMEA Total Gross Billings 31.2 % 28.9 % 27.9 % 27.1 % 27.5 %
Rest of World Segment
Gross Billings
Local Gross Billings $ 120,319 $ 115,156 $ 118,718 $ 116,824 $ 167,833
Goods Gross Billings 77,772 72,399 78,973 89,451 283,091
Travel Gross Billings 36,041 31,796 36,640 32,398 70,930
Total Gross Billings $ 234,132 $ 219,351 $ 234,331 $ 238,673 $ 521,854
Year-over-year growth (11 ) % (21 ) % (13 ) % (11 ) % 123 %
Year-over-year growth, excluding FX (6 ) % (16 ) % (4 ) % (2 ) % 133 %
% Third Party and Other 97 % 97 % 97 % 97 % 99 %
% Direct 3 % 3 % 3 % 3 % 1 %
Gross Billings TTM $ 1,048,973 $ 992,302 $ 956,833 $ 926,487 $ 1,214,209
Revenue
Local Revenue $ 45,414 $ 43,849 $ 51,900 $ 40,847 $ 43,814
Goods Revenue 24,840 20,610 25,061 26,158 41,855
Travel Revenue 7,796 7,144 9,310 6,453 10,013
Total Revenue $ 78,050 $ 71,603 $ 86,271 $ 73,458 $ 95,682
Year-over-year growth (14 ) % (26 ) % (4 ) % (15 ) % 23 %
Year-over-year growth, excluding FX (8 ) % (21 ) % 7 % (6 ) % 35 %
% Third Party and Other 91 % 92 % 91 % 90 % 94 %
% Direct 9 % 8 % 9 % 10 % 6 %
Revenue TTM $ 350,984 $ 325,988 $ 322,597 $ 309,382 $ 327,014
Gross Profit
Local Gross Profit $ 39,490 $ 35,885 $ 44,435 $ 33,596 $ 34,748
% of Rest of World Total Local Gross Billings 32.8 % 31.2 % 37.4 % 28.8 % 20.7 %
Goods Gross Profit 6,712 8,966 12,016 11,781 22,135
% of Rest of World Total Goods Gross Billings 8.6 % 12.4 % 15.2 % 13.2 % 7.8 %
Travel Gross Profit 6,730 5,726 7,921 5,312 8,133
% of Rest of World Total Travel Gross Billings 18.7 % 18.0 % 21.6 % 16.4 % 11.5 %
Total Gross Profit $ 52,932 $ 50,577 $ 64,372 $ 50,689 $ 65,016
Year-over-year growth (26 ) % (33 ) % 1 % (16 ) % 23 %
% Third Party and Other 100 % 101 % 99 % 101 % 102 %
% Direct - % (1 ) % 1 % (1 ) % (2 ) %
% of Rest of World Total Gross Billings 22.6 % 23.1 % 27.5 % 21.2 % 12.5 %
Consolidated Results of Operations
Gross Billings
Local Gross Billings $ 831,457 $ 810,042 $ 732,434 $ 833,427 $ 886,926
Goods Gross Billings 392,324 436,871 443,387 595,370 709,000
Travel Gross Billings 183,988 166,893 166,827 164,310 221,285
Total Gross Billings $ 1,407,769 $ 1,413,806 $ 1,342,648 $ 1,593,107 $ 1,817,211
Year-over-year growth 4 % 10 % 10 % 5 % 29 %
Year-over-year growth, excluding FX 5 % 11 % 11 % 5 % 30 %
% Third Party and Other 88 % 87 % 85 % 77 % 82 %
% Direct 12 % 13 % 15 % 23 % 18 %
Gross Billings (TTM) $ 5,433,153 $ 5,560,283 $ 5,684,675 $ 5,757,330 $ 6,166,772
Year-over-year growth 16 % 11 % 12 % 7 % 14 %
Revenue
Local Revenue $ 329,297 $ 331,455 $ 306,387 $ 318,509 $ 330,181
Goods Revenue 229,375 241,757 252,254 413,713 386,179
Travel Revenue 42,730 35,535 36,418 36,225 41,277
Total Revenue $ 601,402 $ 608,747 $ 595,059 $ 768,447 $ 757,637
Year-over-year growth 8 % 7 % 5 % 20 % 26 %
Year-over-year growth, excluding FX 8 % 8 % 6 % 20 % 26 %
% Third Party and Other 73 % 69 % 66 % 52 % 56 %
% Direct 27 % 31 % 34 % 48 % 44 %
Total Consolidated Revenue TTM  $ 2,376,591 $ 2,417,003 $ 2,443,510 $ 2,573,655 $ 2,729,890
Year-over-year growth 27 % 18 % 12 % 10 % 15 %
Gross Profit
Local Gross Profit $ 283,258 $ 290,931 $ 265,133 $ 279,750 $ 287,436
% of Total Consolidated Local Gross Billings 34.1 % 35.9 % 36.2 % 33.6 % 32.4 %
Goods Gross Profit 59,142 63,051 62,568 66,337 62,041
% of Total Consolidated Goods Gross Billings 15.1 % 14.4 % 14.1 % 11.1 % 8.8 %
Travel Gross Profit 36,609 30,712 31,921 32,121 36,244
% of Total Consolidated Travel Gross Billings 19.9 % 18.4 % 19.1 % 19.5 % 16.4 %
Total Gross Profit $ 379,009 $ 384,694 $ 359,622 $ 378,208 $ 385,721
Year-over-year growth (14 ) % (11 ) % (7 ) % 6 % 2 %
% Third Party and Other 97 % 94 % 95 % 92 % 94 %
% Direct 3 % 6 % 5 % 8 % 6 %
% of Total Consolidated Gross Billings 26.9 % 27.2 % 26.8 % 23.7 % 21.2 %
Adjusted EBITDA $ 71,853 $ 80,511 $ 62,302 $ 71,988 $ 40,301
% of Total Consolidated Gross Billings 5.1 % 5.7 % 4.6 % 4.5 % 2.2 %
% of Total Consolidated Revenue 11.9 % 13.2 % 10.5 % 9.4 % 5.3 %
Free cash flow is a non-GAAP financial measure. The following is a reconciliation of free cash flow to the most comparable U.S. GAAP financial measure, “Net cash provided by (used in) operating activities.”
Net cash provided by (used in) operating activities $ 8,760 $ 43,302 $ (11,905 ) $ 178,275 $ (20,717 )
Purchases of property and equipment and capitalized software (14,468 ) (14,042 ) (15,064 ) (19,931 ) (16,355 )
Free cash flow $ (5,708 ) $ 29,260 $ (26,969 ) $ 158,344 $ (37,072 )
Net cash provided by operating activities (TTM) $ 191,880 $ 159,867 $ 105,874 $ 218,432 $ 188,955
Purchases of property and equipment and capitalized software (TTM) (97,221 ) (84,554 ) (83,608 ) (63,505 ) (65,392 )
Free cash flow (TTM) $ 94,659 $ 75,313 $ 22,266 $ 154,927 $ 123,563
Net cash used in investing activities $ (30,679 ) $ (15,862 ) $ (26,444 ) $ (23,330 ) $ (138,608 )
Net cash used in financing activities $ (9,342 ) $ (7,941 ) $ (8,970 ) $ (55,444 ) $ (41,492 )
Net cash used in investing activities (TTM) $ (179,214 ) $ (134,923 ) $ (125,738 ) $ (96,315 ) $ (204,244 )
Net cash provided by (used in) financing activities (TTM) $ 11,028 $ (21,071 ) $ (32,748 ) $ (81,697 ) $ (113,847 )
Other Metrics
Active Customers (6)
North America 18.2 19.1 19.9 20.8 21.8
EMEA 14.0 13.9 14.0 14.2 14.5
Rest of World 9.5 9.6 9.6 9.9 15.5
Total Active Customers 41.7 42.6 43.5 44.9 51.8
TTM Gross Billings / Average Active Customer (7)
North America $ 151 $ 156 $ 155 $ 150 $ 147
EMEA $ 137 $ 135 $ 137 $ 139 $ 141
Rest of World $ 116 $ 108 $ 102 $ 95 $ 97
Consolidated $ 138 $ 138 $ 137 $ 134 $ 132
Headcount
Sales (8) 4,566 4,679 4,801 4,834 5,231
% North America 28 % 26 % 28 % 29 % 27 %
% EMEA 38 % 39 % 37 % 37 % 37 %
% Rest of World 34 % 35 % 35 % 34 % 36 %
Other 6,433 6,306 6,453 6,449 7,099
Total Headcount 10,999 10,985 11,254 11,283 12,330
(1) Represents the total dollar value of customer purchases of goods and services, excluding 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. Other revenue transactions, which include advertising, payment processing, point of sale, reservation and commission revenue, were previously aggregated with our Travel category. In the current period, the Company has updated its presentation of category information to include gross billings, revenue and gross profit from those other revenue sources within the Local category, and prior period category information has been retrospectively adjusted to conform to the current period presentation.
(3) Includes third party revenue, direct revenue and other revenue. 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. Other revenue primarily consists of advertising revenue, payment processing revenue, point of sale revenue, reservation revenue and commission revenue.
(4) Represents third party revenue, direct revenue and other revenue reduced by cost of revenue. Cost of revenue is comprised of direct and certain indirect costs incurred to generate revenue. Third party cost of revenue includes estimated refunds for which the merchant’s share is not recoverable. Direct cost of revenue includes the cost of inventory, shipping and fulfillment costs and inventory markdowns. 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) in proportion to 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) Reflects the total number of unique user accounts who have purchased a voucher or product from us during the trailing twelve months.
(7) Reflects the total gross billings generated in the trailing twelve months per average active customer over that period.
(8) Includes merchant sales representatives, as well as sales support.
(9) 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.

 

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Groupon Earnings Released: ‘We Had A Record Quarter’
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