Why Groupon Can Soar Like Priceline.com
Kevin Kuo • 66 Comments
Kevin Kuo • 66 Comments
Wed, Oct. 26, 4:21 PM
- Groupon (NASDAQ:GRPN) is off 8% after hours after narrow beats in its Q3 earnings that also featured news it's agreed to acquire LivingSocial.
- The company boosted revenue guidance for 2016 to $3.075B-$3.15B, vs. consensus for $3.103B, and narrowed EBITDA guidance to $150M-$165M (vs. consensus for $154.5M).
- EBITDA of $32.1M beat an expected $28.4M. Meanwhile, gross billings fell 2% to $1.43B, "impacted by dispositions and country exits in connection with Groupon’s restructuring efforts." On a same-country basis and excluding forex, gross billings were up 1%, and gross billings grew 6% in North America. (In EMEA, down 8%; rest of world, down 23%).
- Country exits also depressed global units sold, down 5% to 49M. Again, units in North America were up 4%. Again, EMEA units were down 8%; rest of world, down 31%.
- The company says it plans to close on LivingSocial relatively quickly, by early November, and that the consideration is "not material."
- Operating cash flow was $78.9M; free cash flow was -$53.7M, reflecting adverse impacts from restructuring, country exits and funding litigation settlement.
- Conference call to come at 5 p.m. ET.
- Press Release
Tue, Jun. 21, 7:51 AM
Mon, May 9, 2:33 PM
- Restaurant software startup Upserve has acquired Groupon's (GRPN +1.5%) Breadcrumb restaurant point-of-sale software business in exchange for a minority stake in Upserve.
- Groupon bought Breadcrumb in 2012 for less than $15M. It considered selling the business last year, was reported in August to have called off its sale efforts. Breadcrumb has faced competition from Square, PayPal, and many others.
Oct. 7, 2015, 10:08 AM
- Baidu (BIDU -1.2%) is off moderately in early trading after top Chinese local deals site Meituan.com (backed by Alibaba) announced a merger with #2 deals site and leading restaurant review platform Dianping.com (backed by Tencent), with the goal of creating a giant in the online-to-offline (O2O) services space.
- Meituan/Dianping sport a combined $15B valuation. U.S. local deals leader Groupon (GRPN +2.7%), which sports only a $2.4B market cap, is trading higher. The Nasdaq is up 0.7%.
- Meituan and Dianping both compete against Baidu's Nuomi deals platform (the market's #3 player), which it bought from Renren last year. Baidu has committed RMB20B ($3.2B) to growing its O2O offerings, with Nuomi expected to receive a large chunk of the investment.
- CEO Robin Li has suggested Baidu is investing heavily in O2O to head off the threat of mobile users bypassing its search platform and directly launching 3rd-party mobile apps, and that its spending includes building a large salesforce to win over small businesses. Meanwhile, in a recent WSJ column comparing Baidu/Nuomi and Meituan, Baidu exec Zeng Liang stated Baidu's spending on subsidies for O2O transactions "is not small," and that the company could expand its O2O offerings to cover financial and logistics services.
- Notable Calls reports hearing a tier-1 desk call the Meituan/Dianping deal a "clear negative" for Baidu. It also hears a boutique shop stating a meeting with Baidu suggests the company's Q3 op. margin will be closer to 10% rather than an expected 15%.
Jul. 16, 2015, 3:59 PM
- OrderUp provides food-ordering/delivery services in nearly 40 U.S. markets through its site and apps, and claims to have processed 10M+ orders in its lifetime. Groupon (GRPN +3.3%) is buying the startup for an undisclosed sum.
- Groupon, which counts many restaurants among its deal providers, declares pairing OrderUp's platform with Groupon's ~25M active North American customers will create "an online and mobile food ordering marketplace of significant size and scale." Shares have added to their Thursday gains following the announcement; the Nasdaq is up 1.2%.
- The purchase represents a fresh challenge for online food ordering/delivery leader GrubHub (GRUB +0.8%), whose shares moved slightly lower following the news. In February, Yelp announced it's buying GrubHub rival Eat24 for $134M.
Apr. 20, 2015, 8:59 AM
- Groupon (NASDAQ:GRPN) is up 3.9% premarket as it's agreed to sell a 46% stake in Ticket Monster to KKR and Hong Kong's Anchor Equity for $360M. It'll maintain a fully diluted 41% stake in the South Korean deals business.
- The move values Ticket Monster at $782M (assuming full vesting of management's 13% stake) and means a gain on the sale of $195M-$205M. Groupon will receive $285M in cash with the remainder going to Ticket Monster.
- The company has recast guidance to treat Ticket Monster as discontinued, expecting Q1 revenue between $720M-$770M and non-GAAP EPS between $0.01 and $0.03. Adjusted EBITDA is now expected between $58M-$78M for the quarter.
- Groupon also approved a $300M buyback program upon the closing of the Ticket Monster transaction.
Apr. 14, 2015, 9:38 AM
- Groupon (NASDAQ:GRPN) has opened up 1.8% on news that a group including KKR is near an $800M deal to take control of Ticket Monster -- well above the $260M that Groupon paid for the South Korean deals site early last year.
- The Wall Street Journal says the investment group, which includes Ticket Monster's management team, will sign a deal to take a 59% stake in the business and apply new capital.
- Despite a small population of about 50M, heavy penetration of smartphone purchasing has made South Korean one of the world's top mobile commerce markets.
Apr. 13, 2015, 9:32 AM
- Unloading (undervalued) businesses in the next four years should push Groupon's (GRPN +0.4%) market value closer to $6B, Gene Munster argues.
- "What is safe to say is that Groupon has several stealth assets that are generally underappreciated by investors as far as overall value," Munster says.
- The company's transition into a marketplace akin to Amazon.com or eBay means it may already be looking to divest business like South Korean daily deals site Ticket Monster -- which could bring $500M to Groupon. Smaller units could bring $30M-$100M each, Munster says, including its Breadcrumb point-of-sale unit.
- Munster figures the assets (including Ideel and a stake in home services bookers ClubLocal) can be spun out or sold to private-equity buyers.
- Groupon shares are up 24% in the past six months, but at $7.41 are still well below its 2011 IPO price of $20.
- Previously: Groupon considers selling checkout-software unit (Apr. 07 2015)
- Previously: KKR eyes stake in Groupon's South Korean unit (Mar. 31 2015)
Apr. 7, 2015, 4:30 PM
- As it looks at ways to focus on becoming a shopping destination site, Groupon (GRPN +1.1%) is considering a sale of some portion of its checkout-software unit Breadcrumb, which it acquired in 2012 to make redeeming its deals easier on iPads, and turned into a key point-of-sale service.
- Breadcrumb founder Seth Harris -- still with Groupon -- has reportedly said he's like to raise venture capital to spin the company back out as a standalone.
- Groupon would still have a less fully featured checkout asset without Breadcrumb, which has more features targeted at restaurants and bars.
- While it paid less than $15M for Breadcrumb, Groupon has been exploring bigger divestment as well, including its $260M purchase of Korea's Ticket Monster. The company said in its Q4 call that it was exploring alternatives for Ticket Monster, and KKR and Anchor Partners are talking about taking majority control there.
Mar. 31, 2015, 7:00 AM
- KKR (NYSE:KKR) and Hong Kong-based Anchor Partners are in talks to buy a majority stake in Groupon's (NASDAQ:GRPN) South Korean unit for around 350B won ($316M), Reuters reports quoting the Korea Economic Daily.
- The two firms are in final talks to acquire a 51% stake in e-commerce firm Ticketmonster.
- GRPN -1.5% premarket
Feb. 5, 2015, 11:14 AM
- Groupon (GRPN +2%) is talking with P-E firms and South Korean conglomerates about selling a majority stake in its Ticket Monster (TMON) Korean deals platform for a valuation of around $1B, the WSJ reports. A deal could be closed by the end of March.
- KKR and Samsung offshoot CJ Group are reportedly among the interested parties. With Groupon having struck a deal to buy Ticket Monster from LivingSocial for just $260M in late 2013, the company could be staring at a ~4x return on part of its investment. For reference, Groupon currently has a $5.1B market cap. Ticket Mosnter's 2014 GMV totaled $1.6B.
- Groupon is rallying following the scoop, which comes ahead of the company's Feb. 12 Q4 report. A Korean site reported of P-E interest in Ticket Monster last month.
Jan. 6, 2015, 2:18 PM
- "Private equity firms both at home and abroad participated in the preliminary bidding" for the sale of a stake in Groupon's (GRPN -0.3%) Ticket Monster Korean deals site, BusinessKorea reports. A "preferred bidder" will reportedly be selected in a month, and a deal finalized within two months.
- The site adds a 20%-51% stake is expected to be sold, and that Groupon will remain the largest shareholder. Ticket Monster rival Wemakeprice has officially expressed interest in buying a stake.
- Groupon rallied two weeks ago on a report that Goldman is thinking of buying a stake in Ticket Monster, which Groupon has been seeking a partner for. Shares are near breakeven today in spite of a 1.5% Nasdaq drop.
Dec. 26, 2014, 12:49 PM
- The Korea Times reports Goldman is thinking of taking a stake in Groupon's (NASDAQ:GRPN) Korean Ticket Monster deals site, acquired from Living Social a year ago for $260M. The paper adds Groupon "wants to sell at least a 20 percent stake and is also considering handing over managerial control, selling over half of its stake."
- Groupon stated in October it's exploring options for its Asian ops (Ticket Monster included), and that it could benefit from having a partner in some markets. However, the company added it's not looking to fully unload Ticket Monster.
- CEO Eric Lefkofsky on the Q3 CC (transcript): "Right now, we’re in 47 countries and we can’t invest in every country at the level that we would like to at all time ... [Ticket Monster] is growing faster than we thought. [It's] certainly growing faster than it was when we acquired it ... it has the potential to be the leader in e-commerce in Korea and we’re very focused on the long-term."
- Shares at their highest levels since March.
Nov. 17, 2014, 6:18 PM
- Groupon (NASDAQ:GRPN) has acquired Swarm Mobile, provider of a platform that (with the help of Bluetooth, Wi-Fi, and infrared) tracks/analyzes a retail customer's in-store activity and helps retailers interact with them. Terms are undisclosed.
- Groupon: "The more merchants understand about consumer shopping habits, the more customers benefit through specialized offers, tailored notifications and the opportunity to provide real-time feedback ... Swarm’s team will join our MOS organization in San Francisco and will continue to develop its product portfolio and partner roster, including integrations with a number of leading point-of-sale providers."
- The daily daily leader has long envisioned itself morphing into an end-to-end provider of local commerce services for merchants; results have been mixed to date. Back in June, Groupon bought grocery coupon app developer SnapSaves.
Oct. 30, 2014, 6:55 PM
- Groupon (NASDAQ:GRPN) discloses it has hired advisers to explore strategic options for its Asian ops, including Korean deals site/marketplace Ticket Monster (acquired last year for $260M).
- "There are certain countries where we’d benefit from a partner," says CEO Eric Lefkofsky. The company insists it's not looking to sell all of Ticket Monster.
- With Ticket Monster providing a boost, Groupon's Rest of World segment saw billings rise 154.8% Y/Y in Q3 to $597M, and revenue rise 25.8% to $108.5M. The segment claims 14.3M active customers.
- Shares have turned positive. They were initially down slightly following Groupon's Q3 beat and light Q4 outlook.
- Results/guidance, details.
Jun. 24, 2014, 10:46 AM
- Groupon (GRPN +7.8%) has bought SnapSaves, the Canadian developer of a grocery coupon app. Terms are undisclosed.
- SnapSaves, which claims 2M+ Canadian users, will now expand its reach to the U.S. Its apps allow shoppers to receive cash back on select items after uploading grocery receipt pictures. Retail partners include Target, Costco, Whole Foods, and Safeway.
- The purchase puts Groupon into competition with Coupons.com (COUP), which handled 1.3B+ transactions in 2013 and has a healthy mobile presence. Groupon has long asserted it wants to be an end-to-end provider of local commerce services for merchants.
- Shares are adding to the big gains they saw yesterday following a bullish Piper note. 15% of the float was shorted as of May 30.