LivingSocial Acquisition Boosts Groupon Bottom Line

Restructuring seems to be paying off for Groupon, which reported strong Q4 earnings, with its shares up 20 percent.

According to TechCrunch, the company showed Q4 sales of $934.9 million but with a net loss of $50.2 million and a non-GAAP EPS of $0.07. Both are good news for Groupon since analysts were expecting revenues of $912.8 million and non-GAAP earnings per share of -$0.02.

Even better is that the earnings report, which covers both Q4 and the full year, showed that Groupon acquired longtime rival LivingSocial last quarter for “no consideration,” meaning that it paid nothing. It also showed that it contributed around $9 million in revenues and $4 million in losses, and that acquisitions in the quarter constituted a net acquisition expense of about $1.3 million. That makes it a solid deal for Groupon — especially since it took out a direct competitor in the market.

Groupon also added around 5 million customers in its core market of the U.S. and now has 31.2 million customers in North America and 52.7 million globally. All of this positive news brought the company’s shares up more than 20 percent.

The daily deals platform has been working at restructuring and trying to shift into more profitable areas of eCommerce. Once a hot startup, the site struggled to keep daily deals constant. The acquisition of LivingSocial — as well as the closing of global offices — has been seen a step in the right direction.

“In 2016, our concentrated focus on key strategic initiatives provided a strong foundation for Groupon going forward and resulted in a streamlined global operation, a healthier Goods business, improved customer service and strong customer acquisitions after a successful online and offline marketing strategy,” said CEO Rich Williams in a statement. “We look forward to continuing to invest in the Groupon brand and unlocking the true potential of our business as we make Groupon the daily habit in local commerce.”

Groupon expects gross profit to be in the range of $1.30 billion and $1.35 billion, an increase of $40 million–$90 million compared to full-year 2016 results.


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