This afternoon shares of discount goods and services merchant Groupon (GRPN 4.70, -0.50 -9.6%) trade firmly lower in reaction to the company’s worse than expected Q1 outlook and FY18 EBITDA guidance.
Put plainly, Groupon’s FY18 adjusted EBITDA guidance wasn’t up to snuff; the company expected full year 2018 adjusted EBITDA between $260-270 million vs $250 million a in FY17. To provide some additional context, the company is targeting gross profit dollar growth that exceeds the combined marketing and SG&A dollar growth. Groupon expects this gross profit dollar growth will come from both North America and International. While the company expects to spend more marketing in 2018 than 2017 to support North America and lead into its International business, it plans to remain within the 12-18 month payback thresholds.
Further, shares are being weighed down by comments made on the conference call whereby management guided for FY18 revenues around $2.6 billion on Q1 revenues just below $600 million. Additionally, management expects Q1 gross profit to be about flat to last year, or a bit below $310 million.
Swinging back to the Q4 earnings, Groupon reported non-GAAP net income of $0.07 per share on revenues which dipped 3.5% compared to last year to $873.17 million. Further, adjusted EBITDA, a non-GAAP financial measure, was $105.3 million in Q4, up 31% from $80.2 million a year ago.
Additionally, gross billings were $1.58 billion in Q4, down 2% (4% FX-neutral) from $1.61 billion last year. Global units sold declined 6% year-over-year to 54.6 million in Q4. Units in North America were down 7% with a significant portion of that decline due to the divestiture of certain OrderUp assets and investments in scaling Groupon+.
Groupon now has about 2.7 million cards linked in Groupon+, one of its leading voucherless initiatives, and continue to deepen supply in its more than 25 Groupon+ markets. North American active customers reached 32.7 million as of December 31, 2017, reflecting the addition of 200 thousand net new active customers during Q4 while International active customers increased by 200 thousand net new active customers during Q4 to 16.8 million as of December 31, 2017.
All told, Groupon reported a slight revenue beat in Q4, but the earnings miss and the soft guidance seem to be driving today’s downside. Notwithstanding today’s move lower, Groupon shares had been up about 46% during the last 52-weeks.