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Highlighting Groupon’s Top Line

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Revenue fell 8%

Groupon’s (GRPN) revenue fell in 3Q17, a consequence of the adverse impacts of natural disasters and management’s execution approach that prioritizes profitability over growth.

Its revenue has fallen 8% YoY (year-over-year) to $634.5 million in 3Q17, marking the third quarter of consecutive top-line decline. Its revenue fell 8% YoY in 2Q17 and fell 4% YoY in 1Q17.

The chart above shows how Groupon’s top line has trended in recent quarters.

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Hurricanes wiped out $5 million from top line

Groupon’s top line was hit hard by the hurricanes that struck parts of the United States in late August and early September this year. The company estimated that the hurricanes caused it a revenue loss of $5 million in 3Q17. It lost $4 million in gross profits for the quarter.

When it comes to the impact of natural disasters, Groupon’s case was not an isolated one. Retailer Best Buy (BBY) and telecom (telecommunications) operators Comcast (CMCSA), AT&T (T), and T-Mobile (TMUS) are just some of the US companies that also reported revenue or customer losses due to the hurricanes. AT&T, for instance, attributed the loss of 90,000 pay-TV subscribers to disruptions caused by the hurricanes.

Strategy shift part of the cause

While Groupon’s top line has been falling in recent quarters, it seems to be something management has been expecting since it has prioritized maximizing profits over driving revenue growth.

In this strategy, Groupon has put a significant emphasis on its higher-margin Local segment. The approach has resulted in lower revenue for the Goods segment, which is a big source of revenue. Groupon reports its revenues in three segments: Goods, Local, and Travel.

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