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Groupon Gets A CEO (Eric Lefkofsky), Posts Earnings

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Groupon Gets A CEO (Eric Lefkofsky), Posts Earnings
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Groupon just released its earnings report for the second quarter, its second since former CEO Andrew Mason was fired. The company also took the opportunity to announce that it now has a permanent CEO – Eric Lefkofsky.

Lefkofsky, one of Groupon’s co-founders, has been acting as chairman and co-CEO since Mason was let go, and the board apparently likes what it has seen from him. It also appointed Ted Leonsis Chairman of the Board.

Last time, Groupon beat Wall Street expectations, and this time they did it again.

The company reported gross billings of $1.41 billion and revenue of $608.7 million. GAAP operating income was $27.4 million.

“We significantly exceeded our operating income expectations, and delivered our strongest quarter ever in North America, due in part to accelerated billings growth of 30%,” said Lefkofsky. “With two quarters on the job, I’m pleased with the progress we’ve made in such a short time. We continue to gain traction in mobile, with nearly 50% of our North American transactions coming from mobile in June. To date, more than 50 million people have downloaded Groupon apps worldwide.”

Here’s the earnings release in its entirety:

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

“We significantly exceeded our operating income expectations, and delivered our strongest quarter ever in North America, due in part to accelerated billings growth of 30%,” said Eric Lefkofsky, CEO of Groupon. “With two quarters on the job, I’m pleased with the progress we’ve made in such a short time. We continue to gain traction in mobile, with nearly 50% of our North American transactions coming from mobile in June. To date, more than 50 million people have downloaded Groupon apps worldwide.”

Groupon also announced today that its Board of Directors has appointed Eric Lefkofskyas CEO, and Ted Leonsis as Chairman of the Board. “The Board is encouraged by Groupon’s performance under Eric’s leadership, and we’re pleased that he has agreed to lead the company through this important stage of its evolution,” said Ted Leonsis, Chairman of Groupon.

Second Quarter 2013 Summary

Groupon changed its segment disclosures in the second quarter to separately report three segments: North America, EMEA and Rest of World, which provides a better sense of the financial profile of its regions.

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 $1.41 billion in the second quarter 2013, compared with $1.29 billion in the second quarter 2012. North America growth of 30% and EMEA growth of 4% was offset by a 21% decline in Rest of World.

Revenue increased 7% to $608.7 million in the second quarter 2013, compared with$568.3 million in the second quarter 2012. North America revenue growth of 45% was offset by a 24% decline in EMEA and a 26% decline in Rest of World.

Gross profit was $384.7 million in the second quarter 2013, compared with $433.2 millionin the second quarter 2012.

Operating income was $27.4 million in the second quarter 2013, compared with $46.5 million in the second quarter 2012. Operating income increased$6.2 million compared with the first quarter 2013.

Operating income excluding stock compensation and acquisition-related costs, net, a non-GAAP financial measure, was $59.0 million in the second quarter 2013, compared with $71.9 million in the second quarter 2012. Operating income excluding stock compensation and acquisition-related costs, net, increased $7.9 million compared with first quarter 2013.

Adjusted EBITDA was $80.5 million in the second quarter 2013, compared with $84.7 million in the second quarter 2012.

Second quarter 2013 net loss attributable to common stockholders was $7.6 million, or $0.01 per share, including stock compensation and acquisition-related costs, net, of $31.6 million, or $21.8 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, including a $0.01 negative impact from foreign exchange.

Operating cash flow for the trailing twelve months ended June 30, 2013 was $159.9 million. Free cash flow, a non-GAAP financial measure, was $29.3 million in the second quarter 2013, bringing free cash flow for the trailing twelve months ended June 30, 2013 to $75.3 million.

At the end of the quarter, Groupon had $1.2 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.

Second Quarter Operating Highlights

  • Global units: Consolidated units, defined as vouchers and products sold before cancellations and refunds, increased 15% year-over-year to 46 million. North America units increased 45%, EMEA units decreased 3%, and Rest of World units decreased 12%.
  • Active deals: At the end of the second quarter 2013, the number of active deals in North America increased to more than 54,000 on average, compared with nearly 40,000 as reported at the end of the first quarter 2013.
  • Active customers: Active customers, or customers that have purchased a Groupon within the last twelve months, grew 12% year-over-year, to 42.6 million as of June 30, 2013, comprising 19.1 million in North America, 13.9 million in EMEA, and 9.6 million in Rest of World.
  • Customer spend: Second quarter 2013 trailing twelve month billings per average active customer remained unchanged at $138, compared with the first quarter 2013. North America trailing twelve month billings per average active customer increased $5 compared with the first quarter 2013, from $151 to $156.
  • Mobile: In June 2013, nearly 50% of North American transactions were completed on mobile devices, compared with about 30% in June 2012. More than 50 million people have now downloaded Groupon mobile apps worldwide, with more than 7.5 million people downloading them in the second quarter alone.
  • Marketplace: Direct email accounted for less than 40% of North American transactions in the second quarter 2013, providing evidence that the rollout of Groupon’s marketplace (“Pull”) continues to gain momentum.

Share Repurchase Authorization

Groupon also announced today that its Board of Directors has authorized a share repurchase program. Under the program, Groupon is authorized to repurchase up to $300 million of its outstanding Class A common stock over the next 24 months. The timing and amount of any share repurchases will be determined based on market conditions, share price and other factors, and the program may be discontinued or suspended at any time. Repurchases will be made in compliance with SEC rules and other legal requirements, and may be made in part under a Rule 10b5-1 plan, which permits stock repurchases when Groupon might otherwise be precluded from doing so. The program is intended to offset the annual dilution from employee stock grants.

Outlook

In the third quarter 2013, Groupon expects seasonality to impact the Local business, as people travel more frequently in the summer months. In addition, the Company anticipates continued investment in marketing initiatives to drive long-term growth. As a result, for the third quarter 2013, the Company expects revenue of between $585 million and $635 million, operating income excluding stock compensation and acquisition-related expenses of between$20 million and $40 million, and EPS excluding stock-compensation and acquisition related expenses, net of tax, of between negative $0.01 and positive$0.01. Stock compensation is expected to be approximately $30 million, or approximately $20 million net of tax. This outlook assumes no acquisitions or investments, or material changes in foreign exchange rates.

Groupon reaffirms its guidance that full year 2013 GAAP operating income will exceed $100 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 athttp://investor.groupon.com. This call will contain forward-looking statements and other material information regarding the Company’s financial and operating results.

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 and liquidity.

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 August 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.

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.

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)
Y/Y % Y/Y %
Three Months Ended Growth Six Months Ended Growth
June 30, excluding June 30, excluding
2013 2012 Y/Y % Growth FX Effect (2) FX(2) 2013 2012 Y/Y % Growth FX Effect (2) FX(2)
Gross Billings (1)
North America $ 712,205 $ 548,275 29.9 % $ (130 ) 29.9 % $ 1,393,524 $ 1,101,832 26.5 % $ (201 ) 26.5 %
EMEA 482,250 462,379 4.3 % 3,019 3.6 % 974,568 999,940 (2.5 ) % 4,584 (3.0 ) %
Rest of World 219,351 276,022 (20.5 ) % (12,497 ) (16.0 ) % 453,483 539,704 (16.0 ) % (25,869 ) (11.2 ) %
Consolidated gross billings $ 1,413,806 $ 1,286,676 9.9 % $ (9,608 ) 10.6 % $ 2,821,575 $ 2,641,476 6.8 % $ (21,486 ) 7.6 %
Revenue
North America $ 377,182 $ 260,181 45.0 % $ (42 ) 45.0 % $ 716,736 $ 498,746 43.7 % $ (74 ) 43.7 %
EMEA 159,962 211,555 (24.4 ) % 981 (24.9 ) % 343,760 441,911 (22.2 ) % 1,661 (22.6 ) %
Rest of World 71,603 96,599 (25.9 ) % (4,364 ) (21.4 ) % 149,653 186,961 (20.0 ) % (9,237 ) (15.0 ) %
Consolidated revenue $ 608,747 $ 568,335 7.1 % $ (3,425 ) 7.7 % $ 1,210,149 $ 1,127,618 7.3 % $ (7,650 ) 8.0 %
Income from operations $ 27,412 $ 46,485 (41.0 ) % $ (2,971 ) (34.6 ) % $ 48,590 $ 86,124 (43.6 ) % $ (1,352 ) (42.0 ) %
Net (loss) income attributable to common stockholders $ (7,574 ) $ 28,386       $ (11,566 ) $ 16,691      
Net (loss) earnings per share
Basic $ (0.01 ) $ 0.04 $ (0.02 ) $ 0.03
Diluted $ (0.01 ) $ 0.04 $ (0.02 ) $ 0.03
Weighted average basic shares outstanding 662,361,436 647,149,537 660,580,927 645,073,582
Weighted average diluted shares outstanding 662,361,436 663,122,709 660,580,927 663,230,558
(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 six months ended June 30, 2012.
Groupon, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Three Months EndedJune 30, Six Months EndedJune 30,
2013 2012 2013 2012
Operating activities
Net (loss) income $ (5,551 ) $ 33,549 $ (8,793 ) $ 29,956
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization 21,468 12,810 42,168 24,526
Stock-based compensation 32,446 27,084 62,353 55,087
Deferred income taxes (308 ) 13,873 (566 ) 12,997
Excess tax benefits on stock-based compensation (2,936 ) (18,869 ) (3,768 ) (21,750 )
Loss on equity method investments 14 3,428 33 8,556
Acquisition-related benefit, net (815 ) (1,635 ) (747 ) (1,687 )
Gain on E-Commerce transaction - (56,032 ) - (56,032 )
Change in assets and liabilities, net of acquisitions:
Restricted cash 744 (1,471 ) 3,267 (2,828 )
Accounts receivable 4,743 19,963 (2,941 ) 8,085
Prepaid expenses and other current assets 3,465 (17,624 ) 15,992 (21,745 )
Accounts payable (3,225 ) 20,089 (22,831 ) 18,268
Accrued merchant and supplier payables 1,442 (13,979 ) (37,975 ) 32,021
Accrued expenses and other current liabilities (20,539 ) 49,657 (7,237 ) 63,077
Other, net 12,354 4,472 13,107 10,498
Net cash provided by operating activities 43,302 75,315 52,062 159,029
Net cash used in investing activities (15,862 ) (60,153 ) (46,541 ) (106,597 )
Net cash (used in) provided by financing activities (7,941 ) 24,158 (17,283 ) 15,883
Effect of exchange rate changes on cash and cash equivalents (3,138 ) (14,511 ) (15,516 ) (5,452 )
Net increase (decrease) in cash and cash equivalents 16,361 24,809 (27,278 ) 62,863
Cash and cash equivalents, beginning of period 1,165,650 1,160,989 1,209,289 1,122,935
Cash and cash equivalents, end of period $ 1,182,011 $ 1,185,798 $ 1,182,011 $ 1,185,798
Groupon, Inc.
Consolidated Statements of Operations
(in thousands, except share and per share amounts)
(unaudited)
Three Months Ended June 30, Six Months Ended June 30,
2013 2012 2013 2012
Revenue:
Third party and other $ 418,871 $ 502,985 $ 857,979 $ 1,043,038
Direct 189,876 65,350 352,170 84,580
Total revenue 608,747 568,335 1,210,149 1,127,618
Cost of revenue:
Third party and other 55,507 77,032 125,523 179,661
Direct 168,546 58,152 320,923 75,021
Total cost of revenue 224,053 135,184 446,446 254,682
Gross Profit 384,694 433,151 763,703 872,936
Operating expenses:
Marketing 55,497 88,407 105,054 205,022
Selling, general and administrative 302,600 299,894 610,806 583,477
Acquisition-related benefit, net (815 ) (1,635 ) (747 ) (1,687 )
Total operating expenses 357,282 386,666 715,113 786,812
Income from operations 27,412 46,485 48,590 86,124
Loss on equity method investments (14 ) (3,428 ) (33 ) (8,556 )
Other (expense) income, net (5,565 ) 57,367 (10,629 ) 53,828
Income before provision for income taxes 21,833 100,424 37,928 131,396
Provision for income taxes 27,384 66,875 46,721 101,440
Net (loss) income (5,551 ) 33,549 (8,793 ) 29,956
Net income attributable to noncontrolling interests (2,023 ) (1,220 ) (2,773 ) (2,100 )
Net (loss) income attributable to Groupon, Inc. (7,574 ) 32,329 (11,566 ) 27,856
Adjustment of redeemable noncontrolling interests to redemption value - (3,943 ) - (11,165 )
Net (loss) income attributable to common stockholders $ (7,574 ) $ 28,386 $ (11,566 ) $ 16,691
Net (loss) earnings per share
Basic $ (0.01 ) $ 0.04 $ (0.02 ) $ 0.03
Diluted $ (0.01 ) $ 0.04 $ (0.02 ) $ 0.03
Weighted average number of shares outstanding
Basic 662,361,436 647,149,537 660,580,927 645,073,582
Diluted 662,361,436 663,122,709 660,580,927 663,230,558
Groupon, Inc.
Consolidated Balance Sheets
(in thousands, except share and per share amounts)
June 30, 2013 December 31, 2012
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 1,182,011 $ 1,209,289
Accounts receivable, net 96,808 96,713
Deferred income taxes 30,636 31,211
Prepaid expenses and other current assets 127,496 150,573
Total current assets 1,436,951 1,487,786
Property, equipment and software, net of accumulated depreciation and amortization of $75,210
and $46,236, respectively
125,860 121,072
Goodwill 206,683 206,684
Intangible assets, net 33,186 42,597
Investments 97,321 84,209
Deferred income taxes, non-current 28,837 29,916
Other non-current assets 47,830 59,210
Total Assets $ 1,976,668 $ 2,031,474
Liabilities and Equity
Current liabilities:
Accounts payable $ 35,499 $ 59,865
Accrued merchant and supplier payables 616,605 671,305
Accrued expenses 226,846 246,924
Deferred income taxes 51,191 53,700
Other current liabilities 134,805 136,647
Total current liabilities 1,064,946 1,168,441
Deferred income taxes, non-current 20,387 20,860
Other non-current liabilities 100,907 100,072
Total Liabilities 1,186,240 1,289,373
Commitments and contingencies
Stockholders’ Equity
Class A common stock, par value $0.0001 per share, 2,000,000,000 shares authorized, 661,630,188 and
654,523,706 shares issued and outstanding at June 30, 2013 and December 31, 2012, respectively
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 June 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 June 30, 2013, and December 31, 2012
- -
Additional paid-in capital 1,532,699 1,485,006
Accumulated deficit (765,043 ) (753,477 )
Accumulated other comprehensive income 24,774 12,446
Total Groupon, Inc. Stockholders’ Equity 792,496 744,040
Noncontrolling interests (2,068 ) (1,939 )
Total Equity 790,428 742,101
Total Liabilities and Equity $ 1,976,668 $ 2,031,474
Groupon, Inc.
Segment Information
(in thousands)
(unaudited)
Three Months Ended June 30, Six Months Ended June 30,
2013 2012 2013 2012
North America
Gross Billings (1) $ 712,205 $ 548,275 $ 1,393,524 $ 1,101,832
Revenue $ 377,182 $ 260,181 $ 716,736 $ 498,746
Segment cost of revenue and operating expenses(2) 328,674 216,752 626,862 415,145
Segment operating income(2) $ 48,508 $ 43,429 $ 89,874 $ 83,601
Segment operating income as a percent of segment revenue 12.9 % 16.7 % 12.5 % 16.8 %
EMEA
Gross Billings (1) $ 482,250 $ 462,379 $ 974,568 $ 999,940
Revenue $ 159,962 $ 211,555 $ 343,760 $ 441,911
Segment cost of revenue and operating expenses(2) 135,254 179,761 284,876 373,789
Segment operating income(2) $ 24,708 $ 31,794 $ 58,884 $ 68,122
Segment operating income as a percent of segment revenue 15.4 % 15.0 % 17.1 % 15.4 %
Rest of World
Gross Billings (1) $ 219,351 $ 276,022 $ 453,483 $ 539,704
Revenue $ 71,603 $ 96,599 $ 149,653 $ 186,961
Segment cost of revenue and operating expenses(2) 85,776 99,888 188,215 199,160
Segment operating loss(2) $ (14,173 ) $ (3,289 ) $ (38,562 ) $ (12,199 )
Segment operating loss as a percent of segment revenue (19.8 ) % (3.4 ) % (25.8 ) % (6.5 ) %
Consolidated
Gross Billings (1) $ 1,413,806 $ 1,286,676 $ 2,821,575 $ 2,641,476
Revenue $ 608,747 $ 568,335 $ 1,210,149 $ 1,127,618
Segment cost of revenue and operating expenses(2) 549,704 496,401 1,099,953 988,094
Segment operating income(2) $ 59,043 $ 71,934 $ 110,196 $ 139,524
Segment operating income as a percent of segment revenue 9.7 % 12.7 % 9.1 % 12.4 %
Stock-based compensation 32,446 27,084 62,353 55,087
Acquisition-related benefit, net (815 ) (1,635 ) (747 ) (1,687 )
Income from operations 27,412 46,485 48,590 86,124
Loss on equity method investments 14 3,428 33 8,556
Other expense (income), net 5,565 (57,367 ) 10,629 (53,828 )
Income before provision for income taxes 21,833 100,424 37,928 131,396
Provision for income taxes 27,384 66,875 46,721 101,440
Net (loss) income $ (5,551 ) $ 33,549 $ (8,793 ) $ 29,956
(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, net.
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 six months ended June 30, 2013:
Three Months Ended Six Months Ended
June 30, 2013 June 30, 2013
Net loss attributable to common stockholders $ (7,574 ) $ (11,566 )
Stock-based compensation 32,446 62,353
Acquisition-related benefit, net (815 ) (747 )
Income tax effect of adjustments (9,797 ) (18,910 )
Net income attributable to common stockholders excluding stock-based
compensation and acquisition-related benefit, net $ 14,260 $ 31,130
Diluted shares 662,361,436 660,580,927
Incremental diluted shares (1) 14,644,615 13,410,174
Adjusted diluted shares 677,006,051 673,991,101
Diluted net loss per share $ (0.01 ) $ (0.02 )
Impact of stock-based compensation and acquisition-related
benefit, net and the related income tax effects 0.03 0.07
Diluted earnings per share excluding stock-based compensation and
acquisition-related benefit, net $ 0.02 $ 0.05
(1) Outstanding equity awards are not reflected in the diluted net loss per share calculation for the three and six months ended June 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 six months ended June 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 six months ended June 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 June 30, 2013 was as follows:
Three Months Ended June 30, 2013 Three Months Ended June 30, 2013
At Avg. Exchange At Avg. Exchange
Q2 2012Rates (1) RateEffect (2) AsReported Q1 2013Rates (3) RateEffect (2) AsReported
Gross billings $ 1,423,414 $ (9,608 ) $ 1,413,806 $ 1,427,060 $ (13,254 ) $ 1,413,806
Revenue $ 612,172 $ (3,425 ) $ 608,747 $ 613,123 $ (4,376 ) $ 608,747
Income from operations $ 30,383 $ (2,971 ) $ 27,412 $ 30,817 $ (3,405 ) $ 27,412
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 six months ended June 30, 2013 was as follows:
Six Months Ended June 30, 2013 Six Months Ended June 30, 2013
At Avg. Exchange At Avg. Exchange
Q2 2012 YTDRates (1) RateEffect (2) AsReported Q4’12 – Q1’13Rates (3) RateEffect (2) AsReported
Gross billings $ 2,843,061 $ (21,486 ) $ 2,821,575 $ 2,836,022 $ (14,447 ) $ 2,821,575
Revenue $ 1,217,799 $ (7,650 ) $ 1,210,149 $ 1,214,833 $ (4,684 ) $ 1,210,149
Income from operations $ 49,942 $ (1,352 ) $ 48,590 $ 52,189 $ (3,599 ) $ 48,590
(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 six months ended June 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 six months ended March 31, 2013.
Groupon, Inc.
Supplemental Financial Information and Business Metrics(14)
(financial data in thousands, except per share data; active customers in millions)
(unaudited)
Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013
Segments
North America Segment
Gross Billings (1)
Local (2) Gross Billings
Third Party $ 412,348 $ 349,293 $ 430,255 $ 450,140 $ 449,770
Direct 288 6,450 - - 693
Total Local Gross Billings $ 412,636 $ 355,743 $ 430,255 $ 450,140 $ 450,463
Goods Gross Billings
Third Party $ 40,173 $ 25,508 $ 31,270 $ 17,294 $ 15,501
Direct 52,773 126,608 209,575 148,065 181,377
Total Goods Gross Billings $ 92,946 $ 152,116 $ 240,845 $ 165,359 $ 196,878
Travel and Other Gross Billings
Third Party and Other $ 42,693 $ 44,510 $ 47,852 $ 65,820 $ 64,864
Direct - - - - -
Total Travel and Other Gross Billings $ 42,693 $ 44,510 $ 47,852 $ 65,820 $ 64,864
Total Gross Billings
Third Party and Other $ 495,214 $ 419,311 $ 509,377 $ 533,254 $ 530,135
Direct 53,061 133,058 209,575 148,065 182,070
Total Gross Billings $ 548,275 $ 552,369 $ 718,952 $ 681,319 $ 712,205
Year-over-year growth 48 % 38 % 51 % 23 % 30 %
% of Consolidated Gross Billings 43 % 45 % 47 % 48 % 50 %
Gross Billings Trailing Twelve Months (TTM) $ 1,978,617 $ 2,130,008 $ 2,373,153 $ 2,500,915 $ 2,664,845
Revenue (3)
Local Revenue
Third Party $ 184,189 $ 134,993 $ 142,454 $ 171,593 $ 174,117
Direct 288 6,450 - - 693
Total Local Revenue $ 184,477 $ 141,443 $ 142,454 $ 171,593 $ 174,810
Goods Revenue
Third Party $ 10,387 $ 13,064 $ 11,877 $ 3,144 $ 4,651
Direct 52,774 126,608 209,575 148,065 181,377
Total Goods Revenue $ 63,161 $ 139,672 $ 221,452 $ 151,209 $ 186,028
Travel and Other Revenue
Third Party and Other $ 12,543 $ 10,488 $ 11,445 $ 16,752 $ 16,344
Direct - - - - -
Total Travel and Other Revenue $ 12,543 $ 10,488 $ 11,445 $ 16,752 $ 16,344
Total Revenue
Third Party and Other Revenue $ 207,119 $ 158,545 $ 165,776 $ 191,489 $ 195,112
Direct Revenue 53,062 133,058 209,575 148,065 182,070
Total Revenue $ 260,181 $ 291,603 $ 375,351 $ 339,554 $ 377,182
Year-over-year growth 66 % 81 % 109 % 42 % 45 %
% of Consolidated Revenue 46 % 51 % 59 % 56 % 62 %
Revenue TTM $ 839,909 $ 969,987 $ 1,165,700 $ 1,266,689 $ 1,383,690
Cost of Revenue (4)
Local Cost of Revenue
Third Party $ 35,710 $ 13,176 $ 23,203 $ 25,915 $ 19,818
Direct 234 5,231 - - 636
Total Local Cost of Revenue $ 35,944 $ 18,407 $ 23,203 $ 25,915 $ 20,454
Goods Cost of Revenue
Third Party $ 2,014 $ 1,275 $ 1,935 $ 475 $ 522
Direct 45,925 110,329 196,789 138,278 158,529
Total Goods Cost of Revenue $ 47,939 $ 111,604 $ 198,724 $ 138,753 $ 159,051
Travel and Other Cost of Revenue
Third Party and Other $ 2,431 $ 1,024 $ 1,864 $ 2,530 $ 3,091
Direct - - - - -
Total Travel and Other Cost of Revenue $ 2,431 $ 1,024 $ 1,864 $ 2,530 $ 3,091
Total Cost of Revenue
Third Party and Other Cost of Revenue $ 40,155 $ 15,475 $ 27,002 $ 28,920 $ 23,431
Direct Cost of Revenue 46,159 115,560 196,789 138,278 159,165
Total Cost of Revenue $ 86,314 $ 131,035 $ 223,791 $ 167,198 $ 182,596
% of North America Total Revenue 33 % 45 % 60 % 49 % 48 %
Gross Profit
Local Gross Profit
Third Party $ 148,479 $ 121,817 $ 119,251 $ 145,678 $ 154,299
Direct 54 1,219 - - 57
Total Local Gross Profit $ 148,533 $ 123,036 $ 119,251 $ 145,678 $ 154,356
% of North America Total Local Revenue 80.5 % 87.0 % 83.7 % 84.9 % 88.3 %
% of North America Total Local Gross Billings 36.0 % 34.6 % 27.7 % 32.4 % 34.3 %
Goods Gross Profit
Third Party $ 8,373 $ 11,789 $ 9,942 $ 2,669 $ 4,129
Direct 6,849 16,279 12,786 9,787 22,848
Total Goods Gross Profit $ 15,222 $ 28,068 $ 22,728 $ 12,456 $ 26,977
% of North America Total Goods Revenue 24.1 % 20.1 % 10.3 % 8.2 % 14.5 %
% of North America Total Goods Gross Billings 16.4 % 18.5 % 9.4 % 7.5 % 13.7 %
Travel and Other Gross Profit
Third Party and Other $ 10,112 $ 9,464 $ 9,581 $ 14,222 $ 13,253
Direct - - - - -
Total Travel and Other Gross Profit $ 10,112 $ 9,464 $ 9,581 $ 14,222 $ 13,253
% of North America Total Travel and Other Revenue 80.6 % 90.2 % 83.7 % 84.9 % 81.1 %
% of North America Total Travel and Other Gross Billings 23.7 % 21.3 % 20.0 % 21.6 % 20.4 %
Total Gross Profit
Third Party and Other $ 166,964 $ 143,070 $ 138,774 $ 162,569 $ 171,681
Direct 6,903 17,498 12,786 9,787 22,905
Total Gross Profit $ 173,867 $ 160,568 $ 151,560 $ 172,356 $ 194,586
% of North America Total Revenue 66.8 % 55.1 % 40.4 % 50.8 % 51.6 %
% of North America Total Gross Billings 31.7 % 29.1 % 21.1 % 25.3 % 27.3 %
Operating Income Excl Stock-Based Compensation (SBC), Acquisition-Related (Benefit) Expense, net $ 43,429 $ 39,093 $ 17,032 $ 41,366 $ 48,508
Year-over-year growth N/A 108 % (7 ) % 3 % 12 %
% of Consolidated Operating Income Excl SBC, Acq-Related 60 % 77 % 124 % 81 % 82 %
Operating Margin Excl SBC, Acq-Related (% of North America Total revenue) 16.7 % 13.4 % 4.5 % 12.2 % 12.9 %
Year-over-year growth (bps) 2,337 170 (570 ) (460 ) (380 )
Operating Income TTM Excl SBC, Acq-Related $ 120,676 $ 140,933 $ 139,726 $ 140,920 $ 145,999
Operating Margin TTM Excl SBC, Acq-Related (% of North America Total TTM revenue) 14.4 % 14.5 % 12.0 % 11.1 % 10.6 %
Year-over-year growth (bps) 2,601 2,100 1,120 200 (380 )
Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013
EMEA Segment
Gross Billings
Local Gross Billings
Third Party $ 270,954 $ 182,983 $ 239,944 $ 259,423 $ 241,108
Direct - - - - -
Total Local Gross Billings $ 270,954 $ 182,983 $ 239,944 $ 259,423 $ 241,108
Goods Gross Billings
Third Party $ 113,254 $ 136,960 $ 195,582 $ 141,742 $ 165,413
Direct 10,589 9,880 9,020 7,451 2,181
Total Goods Gross Billings $ 123,843 $ 146,840 $ 204,602 $ 149,193 $ 167,594
Travel and Other Gross Billings
Third Party and Other $ 67,582 $ 66,264 $ 87,935 $ 83,702 $ 73,548
Direct - - - - -
Total Travel and Other Gross Billings $ 67,582 $ 66,264 $ 87,935 $ 83,702 $ 73,548
Total Gross Billings
Third Party and Other $ 451,790 $ 386,207 $ 523,461 $ 484,867 $ 480,069
Direct 10,589 9,880 9,020 7,451 2,181
Total Gross Billings $ 462,379 $ 396,087 $ 532,481 $ 492,318 $ 482,250
Year-over-year growth 27 % (21 ) % 2 % (8 ) % 4 %
Year-over-year growth, excluding FX (5) 41 % (13 ) % 4 % (9 ) % 4 %
% of Consolidated Gross Billings 36 % 33 % 35 % 35 % 34 %
Gross Billings TTM $ 2,026,403 $ 1,920,215 $ 1,928,507 $ 1,883,265 $ 1,903,136
Revenue
Local Revenue
Third Party $ 134,069 $ 109,552 $ 98,668 $ 110,715 $ 109,481
Direct - - - - -
Total Local Revenue $ 134,069 $ 109,552 $ 98,668 $ 110,715 $ 109,481
Goods Revenue
Third Party $ 46,092 $ 49,649 $ 49,173 $ 45,875 $ 32,938
Direct 10,589 9,880 9,020 7,451 2,181
Total Goods Revenue $ 56,681 $ 59,529 $ 58,193 $ 53,326 $ 35,119
Travel and Other Revenue
Third Party and Other $ 20,805 $ 18,206 $ 19,417 $ 19,757 $ 15,362
Direct - - - - -
Total Travel and Other Revenue $ 20,805 $ 18,206 $ 19,417 $ 19,757 $ 15,362
Total Revenue
Third Party and Other Revenue $ 200,966 $ 177,407 $ 167,258 $ 176,347 $ 157,781
Direct Revenue 10,589 9,880 9,020 7,451 2,181
Total Revenue $ 211,555 $ 187,287 $ 176,278 $ 183,798 $ 159,962
Year-over-year growth 27 % (4 ) % (27 ) % (20 ) % (24 ) %
Year-over-year growth, excluding FX(5) 41 % 6 % (25 ) % (20 ) % (25 ) %
% of Consolidated Revenue 37 % 33 % 28 % 31 % 26 %
Revenue TTM $ 876,202 $ 869,268 $ 805,476 $ 758,918 $ 707,325
Cost of Revenue
Local Cost of Revenue
Third Party $ 11,668 $ 10,416 $ 10,622 $ 14,192 $ 10,898
Direct - - - - -
Total Local Cost of Revenue $ 11,668 $ 10,416 $ 10,622 $ 14,192 $ 10,898
Goods Cost of Revenue
Third Party $ 4,012 $ 4,721 $ 5,294 $ 5,880 $ 4,705
Direct 10,594 7,845 14,550 7,472 3,306
Total Goods Cost of Revenue $ 14,606 $ 12,566 $ 19,844 $ 13,352 $ 8,011
Travel and Other Cost of Revenue
Third Party and Other $ 1,810 $ 1,731 $ 2,090 $ 2,533 $ 1,522
Direct - - - - -
Total Travel and Other Cost of Revenue $ 1,810 $ 1,731 $ 2,090 $ 2,533 $ 1,522
Total Cost of Revenue
Third Party and Other Cost of Revenue $ 17,490 $ 16,868 $ 18,006 $ 22,605 $ 17,125
Direct Cost of Revenue 10,594 7,845 14,550 7,472 3,306
Total Cost of Revenue $ 28,084 $ 24,713 $ 32,556 $ 30,077 $ 20,431
% of EMEA Total Revenue 13 % 13 % 18 % 16 % 13 %
Gross Profit
Local Gross Profit
Third Party $ 122,401 $ 99,136 $ 88,046 $ 96,523 $ 98,583
Direct - - - - -
Total Local Gross Profit $ 122,401 $ 99,136 $ 88,046 $ 96,523 $ 98,583
% of EMEA Total Local Revenue 91.3 % 90.5 % 89.2 % 87.2 % 90.0 %
% of EMEA Total Local Gross Billings 45.2 % 54.2 % 36.7 % 37.2 % 40.9 %
Goods Gross Profit
Third Party $ 42,080 $ 44,928 $ 43,879 $ 39,995 $ 28,233
Direct (5 ) 2,035 (5,530 ) (21 ) (1,125 )
Total Goods Gross Profit $ 42,075 $ 46,963 $ 38,349 $ 39,974 $ 27,108
% of EMEA Total Goods Revenue 74.2 % 78.9 % 65.9 % 75.0 % 77.2 %
% of EMEA Total Goods Gross Billings 34.0 % 32.0 % 18.7 % 26.8 % 16.2 %
Travel and Other Gross Profit
Third Party and Other $ 18,995 $ 16,475 $ 17,327 $ 17,224 $ 13,840
Direct - - - - -
Total Travel and Other Gross Profit $ 18,995 $ 16,475 $ 17,327 $ 17,224 $ 13,840
% of EMEA Total Travel and Other Revenue 91.3 % 90.5 % 89.2 % 87.2 % 90.1 %
% of EMEA Total Travel and Other Gross Billings 28.1 % 24.9 % 19.7 % 20.6 % 18.8 %
Total Gross Profit
Third Party and Other $ 183,476 $ 160,539 $ 149,252 $ 153,742 $ 140,656
Direct (5 ) 2,035 (5,530 ) (21 ) (1,125 )
Total Gross Profit $ 183,471 $ 162,574 $ 143,722 $ 153,721 $ 139,531
% of EMEA Total Revenue 86.7 % 86.8 % 81.5 % 83.6 % 87.2 %
% of EMEA Total Gross Billings 39.7 % 41.0 % 27.0 % 31.2 % 28.9 %
Operating Income Excl SBC, Acq-Related $ 31,794 $ 29,107 $ 8,776 $ 34,176 $ 24,708
Year-over-year growth 110 % 14 % (77 ) % (6 ) % (22 ) %
% of Consolidated Operating Income Excl SBC, Acq-Related 44 % 58 % 64 % 67 % 42 %
Operating Margin Excl SBC, Acq-Related (% of EMEA Total revenue) 15.0 % 15.5 % 5.0 % 18.6 % 15.4 %
Year-over-year growth (bps) 592 237 (1,073 ) 282 40
Operating Income TTM Excl SBC, Acq-Related $ 131,426 $ 134,945 $ 106,005 $ 103,853 $ 96,767
Operating Margin TTM Excl SBC, Acq-Related (% of EMEA Total TTM revenue) 15.0 % 15.5 % 13.2 % 13.7 % 13.7 %
Year-over-year growth (bps)(7) N/A N/A N/A (13 ) (132 )
Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013
Rest of World Segment
Gross Billings
Local Gross Billings
Third Party $ 152,359 $ 145,061 $ 128,954 $ 119,990 $ 114,630
Direct - - - - -
Total Local Gross Billings $ 152,359 $ 145,061 $ 128,954 $ 119,990 $ 114,630
Goods Gross Billings
Third Party $ 73,645 $ 74,504 $ 89,475 $ 70,994 $ 66,774
Direct 1,699 2,050 6,581 6,778 5,625
Total Goods Gross Billings $ 75,344 $ 76,554 $ 96,056 $ 77,772 $ 72,399
Travel and Other Gross Billings
Third Party and Other $ 48,319 $ 48,185 $ 44,009 $ 36,370 $ 32,322
Direct - - - - -
Total Travel and Other Gross Billings $ 48,319 $ 48,185 $ 44,009 $ 36,370 $ 32,322
Total Gross Billings
Third Party and Other $ 274,323 $ 267,750 $ 262,438 $ 227,354 $ 213,726
Direct 1,699 2,050 6,581 6,778 5,625
Total Gross Billings $ 276,022 $ 269,800 $ 269,019 $ 234,132 $ 219,351
Year-over-year growth 41 % 6 % 17 % (11 ) % (21 ) %
Year-over-year growth, excluding FX(5) 53 % 15 % 20 % (6 ) % (16 ) %
% of Consolidated Gross Billings 21 % 22 % 18 % 17 % 16 %
Gross Billings TTM $ 1,024,534 $ 1,040,377 $ 1,078,524 $ 1,048,973 $ 992,302
Revenue
Local Revenue
Third Party $ 59,792 $ 54,632 $ 46,166 $ 45,085 $ 43,323
Direct - - - - -
Total Local Revenue $ 59,792 $ 54,632 $ 46,166 $ 45,085 $ 43,323
Goods Revenue
Third Party $ 21,772 $ 21,661 $ 25,529 $ 18,062 $ 14,985
Direct 1,699 2,050 6,580 6,778 5,625
Total Goods Revenue $ 23,471 $ 23,711 $ 32,109 $ 24,840 $ 20,610
Travel and Other Revenue
Third Party and Other $ 13,336 $ 11,319 $ 8,398 $ 8,125 $ 7,670
Direct - - - - -
Total Travel and Other Revenue $ 13,336 $ 11,319 $ 8,398 $ 8,125 $ 7,670
Total Revenue
Third Party and Other Revenue $ 94,900 $ 87,612 $ 80,093 $ 71,272 $ 65,978
Direct Revenue 1,699 2,050 6,580 6,778 5,625
Total Revenue $ 96,599 $ 89,662 $ 86,673 $ 78,050 $ 71,603
Year-over-year growth 40 % 20 % 20 % (14 ) % (26 ) %
Year-over-year growth, excluding FX 52 % 30 % 23 % (8 ) % (21 ) %
% of Consolidated Revenue 17 % 16 % 14 % 13 % 12 %
Revenue TTM $ 333,832 $ 349,079 $ 363,296 $ 350,984 $ 325,988
Cost of Revenue
Local Cost of Revenue
Third Party $ 12,494 $ 13,313 $ 9,801 $ 5,923 $ 7,962
Direct - - - - -
Total Local Cost of Revenue $ 12,494 $ 13,313 $ 9,801 $ 5,923 $ 7,962
Goods Cost of Revenue
Third Party $ 4,447 $ 5,981 $ 7,264 $ 11,501 $ 5,569
Direct 1,399 4,208 7,228 6,627 6,075
Total Goods Cost of Revenue $ 5,846 $ 10,189 $ 14,492 $ 18,128 $ 11,644
Travel and Other Cost of Revenue
Third Party and Other $ 2,446 $ 2,536 $ 1,832 $ 1,067 $ 1,420
Direct - - - - -
Total Travel and Other Cost of Revenue $ 2,446 $ 2,536 $ 1,832 $ 1,067 $ 1,420
Total Cost of Revenue
Third Party and Other Cost of Revenue $ 19,387 $ 21,830 $ 18,897 $ 18,491 $ 14,951
Direct Cost of Revenue 1,399 4,208 7,228 6,627 6,075
Total Cost of Revenue $ 20,786 $ 26,038 $ 26,125 $ 25,118 $ 21,026
% of Rest of World Total Revenue 22 % 29 % 30 % 32 % 29 %
Gross Profit
Local Gross Profit
Third Party $ 47,298 $ 41,319 $ 36,365 $ 39,162 $ 35,361
Direct - - - - -
Total Local Gross Profit $ 47,298 $ 41,319 $ 36,365 $ 39,162 $ 35,361
% of Rest of World Total Local Revenue 79.1 % 75.6 % 78.8 % 86.9 % 81.6 %
% of Rest of World Total Local Gross Billings 31.0 % 28.5 % 28.2 % 32.6 % 30.8 %
Goods Gross Profit
Third Party $ 17,325 $ 15,680 $ 18,265 $ 6,561 $ 9,416
Direct 300 (2,158 ) (648 ) 151 (450 )
Total Goods Gross Profit $ 17,625 $ 13,522 $ 17,617 $ 6,712 $ 8,966
% of Rest of World Total Goods Revenue 75.1 % 57.0 % 54.9 % 27.0 % 43.5 %
% of Rest of World Total Goods Gross Billings 23.4 % 17.7 % 18.3 % 8.6 % 12.4 %
Travel and Other Gross Profit
Third Party and Other $ 10,890 $ 8,783 $ 6,566 $ 7,058 $ 6,250
Direct - - - - -
Total Travel and Other Gross Profit $ 10,890 $ 8,783 $ 6,566 $ 7,058 $ 6,250
% of Rest of World Total Travel and Other Revenue 81.7 % 77.6 % 78.2 % 86.9 % 81.5 %
% of Rest of World Total Travel and Other Gross Billings 22.5 % 18.2 % 14.9 % 19.4 % 19.3 %
Total Gross Profit
Third Party and Other $ 75,513 $ 65,782 $ 61,196 $ 52,781 $ 51,027
Direct 300 (2,158 ) (648 ) 151 (450 )
Total Gross Profit $ 75,813 $ 63,624 $ 60,548 $ 52,932 $ 50,577
% of Rest of World Total Revenue 78.5 % 71.0 % 69.9 % 67.8 % 70.6 %
% of Rest of World Total Gross Billings 27.5 % 23.6 % 22.5 % 22.6 % 23.1 %
Operating Loss Excl SBC, Acq-Related $ (3,289 ) $ (17,712 ) $ (12,105 ) $ (24,389 ) $ (14,173 )
Year-over-year growth (95 ) % (62 ) % (68 ) % 174 % (331 ) %
% of Consolidated Operating Income Excl SBC, Acq-Related (5 ) % (35 ) % (88 ) % (48 ) % (24 ) %
Operating Margin Excl SBC, Acq-Related (% of Rest of World Total revenue) (3.4 ) % (19.8 ) % (14.0 ) % (31.2 ) % (19.8 ) %
Year-over-year growth (bps) 9,391 4,222 3,848 (2,139 ) (1,640 )
Operating Loss TTM Excl SBC, Acq-Related $ (96,318 ) $ (67,914 ) $ (42,016 ) $ (57,495 ) $ (68,379 )
Operating Margin TTM Excl SBC, Acq-Related (% of Rest of World Total TTM revenue) (28.9 ) % (19.5 ) % (11.6 ) % (16.4 ) % (21.0 ) %
Year-over-year growth (bps)(7) N/A N/A N/A 3,590 788
Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013
Consolidated Results of Operations
Gross Billings
Local Gross Billings
Third Party $ 835,661 $ 677,337 $ 799,153 $ 829,553 $ 805,508
Direct 288 6,450 - - 693
Total Local Gross Billings $ 835,949 $ 683,787 $ 799,153 $ 829,553 $ 806,201
Goods Gross Billings
Third Party $ 227,072 $ 236,972 $ 316,327 $ 230,030 $ 247,688
Direct 65,061 138,538 225,176 162,294 189,183
Total Goods Gross Billings $ 292,133 $ 375,510 $ 541,503 $ 392,324 $ 436,871
Travel and Other Gross Billings
Third Party and Other $ 158,594 $ 158,959 $ 179,796 $ 185,892 $ 170,734
Direct - - - - -
Total Travel and Other Gross Billings $ 158,594 $ 158,959 $ 179,796 $ 185,892 $ 170,734
Total Gross Billings
Third Party and Other $ 1,221,327 $ 1,073,268 $ 1,295,276 $ 1,245,475 $ 1,223,930
Direct 65,349 144,988 225,176 162,294 189,876
Total Gross Billings $ 1,286,676 $ 1,218,256 $ 1,520,452 $ 1,407,769 $ 1,413,806
Year-over-year growth 38 % 5 % 24 % 4 % 10 %
Year-over-year growth, excluding FX 47 % 11 % 25 % 5 % 11 %
Gross Billings (TTM) $ 5,029,554 $ 5,090,600 $ 5,380,184 $ 5,433,153 $ 5,560,283
Year-over-year growth 128 % 61 % 35 % 16 % 11 %
Revenue
Local Revenue
Third Party $ 378,050 $ 299,177 $ 287,288 $ 327,393 $ 326,921
Direct 288 6,450 - - 693
Total Local Revenue $ 378,338 $ 305,627 $ 287,288 $ 327,393 $ 327,614
Goods Revenue
Third Party $ 78,251 $ 84,374 $ 86,579 $ 67,081 $ 52,574
Direct 65,062 138,538 225,175 162,294 189,183
Total Goods Revenue $ 143,313 $ 222,912 $ 311,754 $ 229,375 $ 241,757
Travel and Other Revenue
Third Party and Other $ 46,684 $ 40,013 $ 39,260 $ 44,634 $ 39,376
Direct - - - - -
Total Travel and Other Revenue $ 46,684 $ 40,013 $ 39,260 $ 44,634 $ 39,376
Total Revenue
Third Party and Other Revenue $ 502,985 $ 423,564 $ 413,127 $ 439,108 $ 418,871
Direct Revenue 65,350 144,988 225,175 162,294 189,876
Total Revenue $ 568,335 $ 568,552 $ 638,302 $ 601,402 $ 608,747
Year-over-year growth 45 % 32 % 30 % 8 % 7 %
Year-over-year growth, excluding FX 53 % 38 % 31 % 8 % 8 %
Total Consolidated Revenue TTMYear-over-year growth, excluding FX (1) $ 2,049,943 $ 2,188,334 $ 2,334,472 $ 2,376,591 $ 2,417,003
Year-over-year growth 118 % 70 % 45 % 27 % 18 %
Cost of Revenue
Local Cost of Revenue
Third Party $ 59,872 $ 36,905 $ 43,626 $ 46,030 $ 38,678
Direct 234 5,231 - - 636
Total Local Cost of Revenue $ 60,106 $ 42,136 $ 43,626 $ 46,030 $ 39,314
Goods Cost of Revenue
Third Party $ 10,473 $ 11,977 $ 14,493 $ 17,856 $ 10,796
Direct 57,918 122,382 218,567 152,377 167,910
Total Goods Cost of Revenue $ 68,391 $ 134,359 $ 233,060 $ 170,233 $ 178,706
Travel and Other Cost of Revenue
Third Party and Other $ 6,687 $ 5,291 $ 5,786 $ 6,130 $ 6,033
Direct - - - - -
Total Travel and Other Cost of Revenue $ 6,687 $ 5,291 $ 5,786 $ 6,130 $ 6,033
Total Cost of Revenue
Third Party and Other Cost of Revenue $ 77,032 $ 54,173 $ 63,905 $ 70,016 $ 55,507
Direct Cost of Revenue 58,152 127,613 218,567 152,377 168,546
Total Cost of Revenue $ 135,184 $ 181,786 $ 282,472 $ 222,393 $ 224,053
% of Total Consolidated Revenue 24 % 32 % 44 % 37 % 37 %
Gross Profit
Local Gross Profit
Third Party $ 318,178 $ 262,272 $ 243,662 $ 281,363 $ 288,243
Direct 54 1,219 - - 57
Total Local Gross Profit $ 318,232 $ 263,491 $ 243,662 $ 281,363 $ 288,300
% of Total Consolidated Local Revenue 84.1 % 86.2 % 84.8 % 85.9 % 88.0 %
% of Total Consolidated Local Gross Billings 38.1 % 38.5 % 30.5 % 33.9 % 35.8 %
Goods Gross Profit
Third Party $ 67,778 $ 72,397 $ 72,086 $ 49,225 $ 41,778
Direct 7,144 16,156 6,608 9,917 21,273
Total Goods Gross Profit $ 74,922 $ 88,553 $ 78,694 $ 59,142 $ 63,051
% of Total Consolidated Goods Revenue 52.3 % 39.7 % 25.2 % 25.8 % 26.1 %
% of Total Consolidated Goods Gross Billings 25.6 % 23.6 % 14.5 % 15.1 % 14.4 %
Travel and Other Gross Profit
Third Party and Other $ 39,997 $ 34,722 $ 33,474 $ 38,504 $ 33,343
Direct - - - - -
Total Travel and Other Gross Profit $ 39,997 $ 34,722 $ 33,474 $ 38,504 $ 33,343
% of Total Consolidated Travel and Other Revenue 85.7 % 86.8 % 85.3 % 86.3 % 84.7 %
% of Total Consolidated Travel and Other Gross Billings 25.2 % 21.8 % 18.6 % 20.7 % 19.5 %
Total Gross Profit
Third Party and Other $ 425,953 $ 369,391 $ 349,222 $ 369,092 $ 363,364
Direct 7,198 17,375 6,608 9,917 21,330
Total Gross Profit $ 433,151 $ 386,766 $ 355,830 $ 379,009 $ 384,694
% of Total Consolidated Revenue 76.2 % 68.0 % 55.7 % 63.0 % 63.2 %
% of Total Consolidated Gross Billings 33.7 % 31.7 % 23.4 % 26.9 % 27.2 %
Operating Income Excl SBC, Acq-Related $ 71,934 $ 50,488 $ 13,703 $ 51,153 $ 59,043
Year-over-year growth N/A N/A (24 ) % (24 ) % (18 ) %
Operating Margin Excl SBC, Acq-Related (% of Total Consolidated revenue) 12.7 % 8.9 % 2.1 % 8.5 % 9.7 %
Year-over-year growth (bps) 2,853 930 (150 ) (360 ) (300 )
Operating Income TTM Excl SBC, Acq-Related $ 155,784 $ 207,964 $ 203,715 $ 187,278 $ 174,387
Operating Margin TTM Excl SBC, Acq-Related (% of Total Consolidated TTM revenue) 7.6 % 9.5 % 8.7 % 7.9 % 7.2 %
Year-over-year growth (bps) 4,229 3,320 1,770 680 (40 )
Operating Income (Loss) $ 46,485 $ 25,438 $ (12,861 ) $ 21,178 $ 27,412
Year-over-year growth N/A N/A 14 % (47 ) % (41 ) %
Operating Margin (% of Total Consolidated revenue) 8.2 % 4.5 % (2.0 ) % 3.5 % 4.5 %
Year-over-year growth (bps) 3,391 457 100 (360 ) (370 )
Operating Income TTM $ 70,913 $ 96,590 $ 98,701 $ 80,240 $ 61,167
Operating Margin TTM (% of Total Consolidated TTM revenue) 3.5 % 4.4 % 4.2 % 3.4 % 2.5 %
Year-over-year growth (bps) 6,824 4,740 1,870 750 (100 )
Net Income (Loss) Attributable to Common Stockholders 28,386 (2,979 ) (81,089 ) (3,992 ) (7,574 )
Weighted Average Basic Shares Outstanding 647,150 653,224 655,678 658,800 662,361
Weighted Average Diluted Shares Outstanding (6) 663,123 653,224 655,678 658,800 662,361
Net Earnings (Loss) per Share
Basic $ 0.04 $ (0.00 ) $ (0.12 ) $ (0.01 ) $ (0.01 )
Diluted $ 0.04 $ (0.00 ) $ (0.12 ) $ (0.01 ) $ (0.01 )
Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013
The following is a quarterly reconciliation of Adjusted EBITDA to the most comparable U.S. GAAP financial measure, “Net income (loss)” and a quarterly reconciliation of operating income, excluding stock-based compensation and acquisition-related benefit (expense), net, to the most comparable U.S. GAAP financial measure, “Operating income (loss).” (8)
Adjusted EBITDA $ 84,744 $ 65,798 $ 29,668 $ 71,853 $ 80,511
Depreciation and amortization (12,810 ) (15,310 ) (15,965 ) (20,700 ) (21,468 )
Operating income, excluding stock-based compensation and acquisition-related benefit (expense), net 71,934 50,488 13,703 51,153 59,043
Stock-based compensation (27,084 ) (22,619 ) (26,411 ) (29,907 ) (32,446 )
Acquisition-related benefit (expense), net 1,635 (2,431 ) (153 ) (68 ) 815
Operating income (loss) 46,485 25,438 (12,861 ) 21,178 27,412
Non Operating Items
Loss on equity method investments (3,428 ) (138 ) (1,231 ) (19 ) (14 )
Other income (expense), net 57,367 617 (48,279 ) (5,064 ) (5,565 )
Provision for income taxes (66,875 ) (26,857 ) (17,676 ) (19,337 ) (27,384 )
Net income (loss) $ 33,549 $ (940 ) $ (80,047 ) $ (3,242 ) $ (5,551 )
The following is a trailing twelve months reconciliation of Operating income, excluding stock-based compensation and acquisition-related benefit (expense), net, to the most comparable U.S. GAAP financial measure, “Operating Income.” (8)
Operating income, excluding stock-based compensation and acquisition-related benefit (expense), net TTM $ 155,784 $ 207,964 $ 203,715 $ 187,278 $ 174,387
Stock-based compensation (91,095 ) (110,374 ) (104,117 ) (106,021 ) (111,383 )
Acquisition-related benefit (expense), net 6,224 (1,000 ) (897 ) (1,017 ) (1,837 )
Operating income TTM $ 70,913 $ 96,590 $ 98,701 $ 80,240 $ 61,167
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 41 % (13 ) % 4 % (9 ) % 4 %
FX Effect (14 ) % (8 ) % (2 ) % 1 % - %
EMEA Gross Billings growth 27 % (21 ) % 2 % (8 ) % 4 %
Rest of World Gross Billings growth, excluding FX 53 % 15 % 20 % (6 ) % (16 ) %
FX Effect (12 ) % (9 ) % (3 ) % (5 ) % (5 ) %
Rest of World Gross Billings growth 41 % 6 % 17 % (11 ) % (21 ) %
Consolidated Gross Billings growth, excluding FX 47 % 11 % 25 % 5 % 11 %
FX Effect (9 ) % (6 ) % (1 ) % (1 ) % (1 ) %
Consolidated Gross Billings growth 38 % 5 % 24 % 4 % 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 41 % 6 % (25 ) % (20 ) % (25 ) %
FX Effect (14 ) % (10 ) % (2 ) % - % 1 %
EMEA Revenue growth 27 % (4 ) % (27 ) % (20 ) % (24 ) %
Rest of World Revenue growth, excluding FX 52 % 30 % 23 % (8 ) % (21 ) %
FX Effect (12 ) % (10 ) % (3 ) % (6 ) % (5 ) %
Rest of World Revenue growth 40 % 20 % 20 % (14 ) % (26 ) %
Consolidated Revenue growth, excluding FX 53 % 38 % 31 % 8 % 8 %
FX Effect (8 ) % (6 ) % (1 ) % - % (1 ) %
Consolidated Revenue growth 45 % 32 % 30 % 8 % 7 %
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 operating activities $ 75,315 $ 42,088 $ 65,717 $ 8,760 $ 43,302
Purchases of property and equipment and capitalized software (26,709 ) (16,010 ) (40,034 ) (14,468 ) (14,042 )
Free cash flow (10) $ 48,606 $ 26,078 $ 25,683 $ (5,708 ) $ 29,260
Net cash provided by operating activities (TTM) $ 392,517 $ 370,194 $ 266,834 $ 191,880 $ 159,867
Purchases of property and equipment and capitalized software (TTM) (62,401 ) (69,788 ) (95,836 ) (97,221 ) (84,554 )
Free cash flow (TTM) $ 330,116 $ 300,406 $ 170,998 $ 94,659 $ 75,313
Net cash used in investing activities $ (60,153 ) $ (35,629 ) $ (52,753 ) $ (30,679 ) $ (15,862 )
Net cash provided by (used in) financing activities $ 24,158 $ 2,707 $ (6,495 ) $ (9,342 ) $ (7,941 )
Net cash used in investing activities (TTM) $ (184,552 ) $ (177,133 ) $ (194,979 ) $ (179,214 ) $ (134,923 )
Net cash provided by (used in) financing activities (TTM) $ 771,404 $ 765,503 $ 12,095 $ 11,028 $ (21,071 )
Other Metrics
Active Customers (11)
North America 15.1 16.0 17.2 18.2 19.1
EMEA 14.2 14.4 14.3 14.0 13.9
Rest of World 8.7 9.1 9.5 9.5 9.6
Total Active Customers 38.0 39.5 41.0 41.7 42.6
TTM Gross Billings / Average Active Customer (12)
North America $ 151 $ 148 $ 152 $ 151 $ 156
EMEA $ 189 $ 160 $ 146 $ 137 $ 135
Rest of World $ 152 $ 133 $ 126 $ 116 $ 108
Consolidated $ 165 $ 149 $ 144 $ 138 $ 138
Headcount
Sales (13) 5,587 5,087 4,677 4,566 4,679
% North America 20 % 24 % 25 % 28 % 26 %
% EMEA 45 % 43 % 42 % 38 % 39 %
% Rest of World 35 % 33 % 33 % 34 % 35 %
Other 7,233 6,779 6,717 6,433 6,306
Total Headcount 12,820 11,866 11,394 10,999 10,985
(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) 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.
(7) 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.
(8) Adjusted EBITDA and Operating income excluding stock-based compensation and acquisition-related benefit (expense), net are non-GAAP financial measures. The Company reconciles Adjusted EBITDA to the most comparable U.S. GAAP financial measure, “Net income (loss)” for the periods presented, and the Company reconciles Operating income excluding stock-based compensation and acquisition-related benefit (expense), 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 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.

 

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