Analyst Note| Ali Mogharabi |
Groupon posted better-than-expected second-quarter results, as higher inventory, the return of many merchants, and enhancements to the app for consumers resulted in year-over-year and sequential growth in billings and revenue. On the bottom line, adjusted EBITDA benefited from unredeemed vouchers, leading management to increase 2021 adjusted EBITDA guidance, which remains slightly below our estimates. The stock declined 14%, as adjusted EBITDA outlook may have declined without the benefit. Groupon did not change its full-year revenue guidance. We think the market also reacted to the possibility that a pullback occurred in North America billings during recent months. In addition, the firm expects recovery in the international market to take a bit longer. The slowdown is likely short term. While some merchants remain hesitant to increase their offerings due to labor shortages and the delta variant of the coronavirus, consumer demand remains strong and the state of employment and labor in the U.S. is improving, as shown in July’s jobs report.