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Groupon's North American growth slows, EMEA revenue declines again

  • Groupon (GRPN) had Q3 gross billings of $1.34B (+10% Y/Y). The company's take rate (revenue/billings) was 44.4%, up from 43.2% in Q2 and 42.7% in Q1.
  • Though Groupon expects "strong holiday sales interest," Q4 results are expected to be pressured by "e-mail headwinds," as well as "marketing initiatives" to promote Groupon's deals/goods marketplace (previous).
  • Q3 gross margin was 60.4%, -280 bps Q/Q and -760 bps Y/Y, as the company's shift towards direct/e-commerce sales continues having an impact.
  • North American sales (61% of total) +24% Y/Y, a slowdown in growth from Q2's +45% and largely responsible for the Q3 miss. EMEA sales -21% after dropping 24% in Q2. Rest of world -4%, better than Q2's -26%.
  • EMEA revenue fell even though Groupon's billings to the region rose 12%; that implies a major take rate drop. North American take rate rose slightly.
  • Third party and other revenue (deals-focused) -7% Y/Y to $394.9M after dropping 17% in Q2. Direct revenue (e-commerce-focused) +38% to $201M; that's a big slowdown from Q2's 190% clip.
  • Marketing spend fell again, dropping 25% to $53.3M. SG&A spend +2% to $294.1M. Just $9M was spent on buybacks; Groupon's average price was a steep $11.67.
  • GRPN -5.9% AH. Q3 results, PR, slides.
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