What’s Likely to Happen to Groupon’s 2Q17 Earnings



EBITDA to slide sequentially

Groupon (GRPN) is expected to release its 2Q17 earnings report on July 25 before markets open in the US (SPY). When the company reported 1Q17 earnings on May 3, it warned that its EBITDA (earnings before interest, tax, depreciation, and amortization) for the current quarter would decline sequentially. Groupon posted adjusted EBITDA of $44.8 million in 1Q17.

The company’s EBITDA decline is expected to come from spending aimed at strengthening its operations. The company is pumping a lot of funds into marketing activities as it seeks to establish itself as the go-to site for local e-commerce.

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North American customer base grows by 0.5 million

To compete with giants like Amazon.com (AMZN), eBay (EBAY), Wal-Mart Stores (WMT), and Target (TGT), Groupon aims to bolster its brand identity and capture the attention of online shoppers, and doing this requires investments.

Groupon’s customer acquisition efforts in 1Q17 appear to be paying off in terms of marketing. The company added 0.5 million active customers in North America in 1Q17, which saw it finish the quarter with 31.6 million active customers in the region. Globally, Groupon counts 48.3 million active customers.

After a troubled international expansion, Groupon decided to prioritize growth in North America. And although its current quarter EBITDA metric will likely decline sequentially, the company expects annual growth, and the current quarter’s EBITDA is still seen as topping its EBITDA figure of $36.0 million one year previously.


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