Groupon Q1 Earnings Surpass Estimates, Revenues Decrease Y/Y

Groupon GRPN reported earnings of 18 cents per share in the first quarter of 2025, which beat the Zacks Consensus Estimate by 190%. The company had incurred a loss of 33 cents per share in the year-ago quarter.

The company’s earnings beat the Zacks Consensus Estimate in two of the trailing four quarters and missed twice, delivering a negative average surprise of 394.50%.

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Revenues of $117.2 million beat the consensus estimate by 1.46%. The figure decreased 4.8% on a year-over-year basis. 

Region-wise, North America’s revenues of $91.11 million beat the consensus mark by 2% and declined 3.2% year over year. International revenues of $26.07 million missed the consensus mark by 3.09% and decreased 9.9% year over year (7.9% excluding the foreign exchange effect).

Groupon, Inc. Price, Consensus and EPS Surprise

Groupon, Inc. price-consensus-eps-surprise-chart | Groupon, Inc. Quote

GRPN’s Quarterly Details

Local revenues of $108.4 million beat the Zacks Consensus Estimate by 3.28% and declined 2.6% year over year. North America Local revenues decreased 0.6%, while International Local revenues declined 9.4% year over year.

Consolidated Travel revenues of $5.05 million missed the consensus mark by 21.57% and decreased 20.5% year over year. North America Travel revenues decreased 20.4% year over year. International Travel revenues declined 20.7% in the reported quarter (17.4% excluding the foreign exchange effect).

On a consolidated basis, Goods revenues of $3.78 million missed the consensus mark by 10.33% and declined 31.6% year over year. North America Goods revenues declined 50.9% and International Goods revenues decreased 4.7%, excluding the foreign exchange effect, on a year-over-year basis.

GRPN’s Customer Metrics

At the end of the first quarter, Groupon had approximately 15.5 million active customers compared with 16.1 million at the end of the year-ago quarter. However, the metric beat the Zacks Consensus Estimate by 5.66%.

The company had approximately 10.5 million active customers based in North America, beating the consensus mark by 6.38%. GRPN had 5 million active international customers, beating the consensus mark by 4.17%.

Operating Details of GRPN

In the first quarter, Groupon’s consolidated gross profit fell 3.9% from the year-ago period’s levels to $106.3 million. North America gross profit fell 1.5% and International gross profit declined 9.4%, excluding the foreign exchange effect, on a year-over-year basis.

Gross margin expanded 90 basis points to 90.7%.

Selling, general and administrative expenses fell 6% year over year to $69.84 million. Marketing expenses increased 19.5% year over year to $34.4 million.

The company reported a GAAP operating profit of $1.88 million compared with a profit of $7.37 million in the year-ago quarter. Also, adjusted EBITDA declined 21.5% to $15.3 million.

GRPN’s Balance Sheet & Cash Flow

Groupon exited the quarter with cash and cash equivalents of $226.8 million, down from $228.8 million as of Dec. 31, 2024.

In the first quarter, the operating cash inflow was the same as the cash inflow of $67 million in the prior quarter.

Groupon reported a free cash outflow of $3.8 million against $63.2 million of free cash inflow reported in the previous quarter.

GRPN’s Guidance

For the second quarter of 2025, the company expects revenues in the band of $121-$123 million, indicating a 3-1% year-over-year decline. The Zacks Consensus Estimate for first-quarter 2025 revenues is pegged at $121.39 million, indicating a 2.59% year-over-year decline.

Adjusted EBITDA is expected to be between $14 million and $17 million.

Groupon expects a flat free cash flow for the second quarter.

For 2025, the company expects revenues between $493 million and $500 million, indicating a year-over-year growth of 0-2%.

Adjusted EBITDA is expected to be between $70 million and $75 million.

Groupon expects a positive free cash flow of at least $41 million for 2025.

Zacks Rank and Stocks to Consider

Currently, GRPN carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader Zacks Retail-Wholesale sector are Alibaba BABA, Costco Wholesale COST and Canada Goose GOOS, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Shares of Alibaba have gained 48.4% year to date. It is set to report fourth-quarter fiscal 2025 results on May 15.

Shares of COST have gained 10% year to date. It is slated to report third-quarter fiscal 2025 results on May 29.

Shares of GOOS have lost 14% year to date. It is set to report fourth-quarter fiscal 2025 results on May 21.

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This article originally published on Zacks Investment Research (zacks.com).

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