Earnings Preview: Groupon might not put up a sweet deal in Q3

Groupon Inc. (GRPN) is set to report third-quarter 2018 earnings results on Wednesday, November 7, before the market opens. The consensus estimate is for earnings of $0.02 per share on revenue of $602.7 million. The revenue number reflects a 5% decline from last year. Over the past four quarters, the company has topped earnings estimates only once.

In the second quarter, Groupon missed expectations on both revenue and earnings. Revenues dropped 6.8% to $617.4 million while adjusted EPS remained flat at $0.02. Gross billings dropped 14% while global units sold fell 10%. The number of active customers grew to 49.3 million.

Groupon has entered into partnerships with several companies and this enables it to serve all types of customers in various markets. Looking ahead, the company expects its products and services to help drive growth. The Groupon + service has received positive responses from users and its momentum is expected to continue in the third quarter.

Groupon shares fall as Q2 results miss analysts estimate

Groupon’s second quarter results were hurt by a charge related to the IBM lawsuit. The lawsuit is expected to impact the company’s third quarter margins as well. The ongoing revenue declines are a dampener for the company, whose business model has received criticism from market insiders.

For the full year of 2018, Groupon expects adjusted EBITDA to be $280 million to $290 million. Free cash flow is expected to be approx. $200 million, after the payment of the IBM litigation expenses.

Groupon’s stock is down 35% so far this year and looking at the past one month, the stock is down 12%. If the company beats expectations for the third quarter, the stock is likely to get a lift.

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