Groupon ((GRPN)) has held its Q1 earnings call. Read on for the main highlights of the call.
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Groupon’s latest earnings call revealed a positive start to the year, marked by exceeded guidance and notable growth in billings, particularly in North America and international markets such as Spain. Despite some challenges, including lagging revenue due to strategic take rate adjustments and slow app conversion progress, the company demonstrated confidence through leadership changes and raised guidance.
Exceeding Guidance and Growth in Billings
Groupon’s Q1 results surpassed expectations, with global billings increasing by 1.4% year-over-year. North America Local billings notably accelerated to an 11% year-over-year growth, marking the first double-digit growth since 2017, excluding the pandemic recovery period. This achievement underscores the company’s successful strategies in boosting billings.
Strong Performance in North America Local
The North American market showed robust performance, with the top 10 cities experiencing double-digit growth in billings. The “Things to Do” segment stood out with its fifth consecutive quarter of double-digit growth, significantly outperforming current industry trends and highlighting Groupon’s strong market presence.
Impressive International Growth
Internationally, Groupon’s local business, excluding Italy, achieved a 5% year-over-year billings growth. Spain emerged as a leader among international markets, showcasing strong double-digit growth and validating the success of Groupon’s transformation strategy.
Strategic Leadership and Team Strengthening
Groupon has bolstered its leadership team with key appointments, including Josef Buryan as Chief Marketing Officer and Ales Drabek as Chief Technology Officer. These strategic hires aim to strengthen the company’s operations and drive future growth.
Raised Guidance for Core Business
Despite the sale of the Giftcloud subsidiary, which impacted revenue and adjusted EBITDA, Groupon raised its guidance for the core business. This move reflects the company’s confidence in its operations and its commitment to achieving long-term growth.
Revenue Lagging Due to Take Rate Compression
While billings have grown, revenue progress is lagging due to a deliberate compression of take rates in North America Local. This strategy is part of Groupon’s focus on building a sustainable foundation for long-term growth, even if it temporarily affects revenue figures.
Challenges in Mobile Application Conversion
Groupon faces challenges in transitioning to the MobileNext application, with some legacy customers struggling with the new interface. This slow progress indicates the need for further improvements to enhance user experience and conversion rates.
Forward-Looking Guidance
Looking ahead, Groupon provided a positive outlook for 2025, with expectations of continued growth in billings and adjusted EBITDA. The company raised its full-year billings growth guidance from 2%-4% to 3%-5%, maintaining revenue and adjusted EBITDA guidance despite the impact of the Giftcloud sale. Groupon remains focused on marketplace health, platform modernization, and financial strength to ensure long-term sustainable growth.
In summary, Groupon’s earnings call highlighted a strong start to the year with exceeded guidance and significant growth in billings. While challenges remain, the company’s strategic leadership changes and raised guidance reflect confidence in its future prospects. Investors can look forward to Groupon’s continued focus on sustainable growth and market expansion.