Groupon (GRPN) Q1 2025 earnings summary

Executive summary

• Q1 2025 results exceeded guidance on billings and adjusted EBITDA, with a slight revenue beat; global revenue was $117.2M, down 4.8%-5% year-over-year, while net income swung to $7.2M-$8.0M from a prior loss.

• Global billings grew 1.4% to $386.5M, led by 11% growth in North America local, the first double-digit growth since 2017 (excluding pandemic recovery).

• Transformation strategy focuses on quality local experiences, platform modernization, and financial strength, with leadership strengthened by key appointments.

• Free cash flow improved to $(3.8)M from $(13.8)M year-over-year, reflecting better working capital management.

• Completed a fully backstopped $80M rights offering and prepaid $43.1M to terminate its revolving credit facility.

Financial highlights

• North America local billings up 11% year-over-year; top 10 cities saw double-digit billings growth, but North America revenue fell 3.2% to $91.1M.

• International local business (excluding Italy) grew billings by approximately 5% year-over-year; International revenue dropped 9.9%-10% to $26.1M.

• Gross profit was $106.3M, down 3.8%-4% year-over-year; gross margin remained strong at 90.8%.

• Units sold declined 6.4% to 8.5M; TTM active customers decreased 4.1% to 15.5M.

• Marketing expense rose 19.5% to $34.4M, with marketing as a percentage of revenue up to 29.1%.

Outlook and guidance

• Q2 expected to show accelerating year-over-year growth in both billings and revenue, with full-year billings growth guidance raised from 2%-4% to 3%-5%.

• Revenue and adjusted EBITDA guidance unchanged despite the Giftcloud sale; maintaining guidance post-sale effectively raises core business expectations.

• Management expects continued volatility due to macroeconomic pressures, foreign exchange, and ongoing legal and tax matters.

• Liquidity is considered sufficient for operational needs and debt maturities over the next 12 months.

• Management aims to accelerate growth, focusing on sustainable value for consumers and merchants.