On June 16, 2020 Groupon Inc (NASDAQ: GRPN) announced its financial results for first quarter ended March 31, 2020. The Interim Chief Executive Officer, Aaron Cooper, has said that the COVID- 19 pandemic has affected the business and the company has taken all the necessary steps to help its merchants face the challenges of the pandemic, further he added that, the company believes that it now has a competitive advantage due to the current volatile market condition which will help them to acquire market share in the $1 trillion local experiences market.
- Revenue: The Total Revenue for Q1 2020 was $ 374.15 million which has decreased by 35.31% compared to $578.41 million in Q1 2019 (Y-o-Y) and the revenue has decreased by 38.89% compared to $612.3 million in Q4 2019 (Q-o-Q). The Company has two segments from which it generates its revenue, the revenue from Service segment for Q1 2020 was $207.02 million which has decreased by 27.56% compared to $285.82 in Q1 2019 (Y-o-Y), the revenue from Product segment for Q1 2020 was $167.12 million which has decreased by 42.8% compared to $292.5 million in Q1 2019 (Y-o-Y).
- Gross Profit: The Gross Profit for Q1 2020 was $201.2 million which has decreased by 34.23 % compared to $306 million in Q1 2019 (Y-o-Y).
- Gross Margin: The Gross Margin for Q1 2020 was 53.78% which has reduced by approx. 100 basis points compared to 52.9 % in Q1 2019.
- Operating Expenses: The Total operating Expenses for Q1 2020 was $399.1 million which increased by 31.3 % compared to $303.8 million in Q1 2019 (Y-o-Y). This increase was primarily due to Goodwill impairment cost of $109.4 million and long-lived assets impairment of $22.3 million.
- Loss from Operations: The Company for Q1 2020 has reported a loss of $197.8 million from its business operations compared to an operating profit of $2.1 million in Q1 2019 (Y-o-Y).
- Net Loss: The Company has reported a net loss of $210.86 million for Q1 2020 which has increased compared to $39 million in Q1 2019 (Y-o-Y).
- Earnings (Loss) per Share: The Loss per share for Q1 2020 was $7.53 per share which has increased compared to a loss per share of $1.49 per share in Q1 2019.
The Revenue from North America geographical segment for Q1 2020 was $235.12 million which has decreased by 34.16% compared to $357.16 million in Q1 2019 (Y-o-Y) primarily due to the impact of COVID- 19. The Gross Profit from North America for Q1 2020 was $143.7 million which has decreased by 31.4% compared to $209.8 million in Q1 2019 (Y-o-Y). The Revenue from the International Segment for Q1 2020 was $139.02 million which has decreased by 37.16% compared to $221.2 million in Q1 2019 (Y-o-Y). The Gross Profits from the international segment for Q1 2020 was $57.4 million which has decreased by 40.3% compared to $96.2 million in Q1 2019 (Y-o-Y).
Balance –Sheet Highlights
The Cash & cash equivalents for Q1 2020 was $666.86 million which has decreased compared to $750.88 million in Q1 2019. The company has a long term debt of $322.20 million in Q1 2020 which has decreased compared to $325.16 million in Q4 2019. The Company has long term investments of $33.6 million which has reduced compared to $76.5 million long term investments in Q1 2019. The Shareholder’s equity has reduced to $191.50 million in Q1 2020 compared to $395.04 million in Q1 2019.
Cash Flow Highlights
The Company has generated negative cash flow from operating activity of $236.40 million which has increased compared to a negative cash flow of $147.48 million in Q1 2019. The cash generated from investing activity in Q1 2020 was $19.5 million, the generated $141.31 million from financing activity in Q1 2020. The Company also generated a negative free cash flow of $247 million in the first quarter of 2020.
The Company has $150 million of outstanding borrowings as of March 31, 2020, under its revolving credit facility of $400 million and it has borrowed additional $50 million under the credit facility in April 2020. The Other expenses incurred were partially offset by a $4.8 million increase in foreign currency losses and $6.7 million impairment of other equity investments. The company has reported that it has started its restructuring plans and liquidity preservation measures which include a combination of furloughs and layoffs which will save around $100 million in 2020. The Company expects the restructuring plan if fully implemented it can result in annual cost savings of $225 million. The Company has reported that its marketing expenses have reduced by 36% to $60.1 million.