Groupon Badly Disappoints on Q1 Results and Lowers Full-Year Adj. EBITDA Guidance; FVE Cut to $38

Groupon reported miserable first-quarter 2022 results, widely missing the top- and bottom-line FactSet consensus estimates. The firm also provided very disappointing guidance for the current quarter and full year. Surprisingly, what appeared to be an ongoing healthy recovery in local and travel revenue came to an abrupt halt due to lower merchant demand, as many merchants have been enjoying high direct consumer demand accompanied by a likely improvement in inventory management, both of which lessen current need for Groupon’s discount provider platform. While we were pleased with management’s strategy to offer merchants more than just a marketplace for low-demand and/or discounted services, management has stated similar goals in the past. However, at the same time, we still expect improvement in customer monetization as Groupon continues to provide another marketing channel for merchants to target the firm’s 16 million customers and 100 million users accessing the app and website monthly.