Groupon, the local deals platform, reported Q3 earnings today that provided more details on how it is restructuring its business; and it also took the moment to announce that it has finally appointed a new COO, a role that has been vacant for the last two years. Steve Krenzer, who had been the CEO of direct-ad specialist Core Digital Media, is taking on the role, the first time Groupon has had a COO since Rich Williams left the role to become the company’s CEO in November 2015.
On the earnings front, Groupon continues to restructure its operations on its mission to right-size its business for the future, but it still partly fell short of analysts’ estimates for how it should be performing right now. The company reported revenues of $634 million, with non-GAAP earnings per share of $0.01. This was a miss on revenues but a beat on EPS, as analysts on average were expecting sales of $643 million and an EPS of $0.
Active customers currently stand at 49.1 million, Groupon said, representing slight growth on a year ago when there were 45.7 million customers (latter figure adjusted down on previous numbers because Groupon’s now exited certain international markets). Gross billings, however are in decline at the moment with $119.6 compared to $127.3 a year ago, and gross profit also down to $27.35 versus $28.72 a year ago.
It was, overall, a more positive picture painted by the company: gross profit was $309.4 million, with net income from continuing operations of $3.8 million (non-GAAP net income was nearly double this, $6.8 million). This is a big swing in the right direction when compared to Groupon’s net loss of $34.4. million in the same quarter a year ago.
The numbers seem to be pleasing the market. Groupon is currently trading about 3.5 percent higher on its opening price.
That process of restructuring also is gradually meting out other data about the company.
Back in July, Groupon announced that it was getting out of the food delivery business — a significant piece in the company’s long-running divestment strategy of its restaurant and food business. Built on a string of acquisitions over several years of startups like OrderUp, Savored and Breadcrumb, it once stretched into point-of-sale software, delivery and more in an attempt to grow the revenues that Groupon made from its merchant partners.
After selling its Breadcrumb POS business last year, Groupon this summer said that it would strike a deal with Grubhub to take on its delivery business and work in partnership in the future. In its 10-Q filing today, Groupon revealed that in September it was paid $19.8 million in that transaction — which consisted of “customer lists and other intangible assets in certain food delivery markets”.
Groupon said that it recorded the deal as a pretax gain on the sale of assets of $17.1 million (“the excess of the $19.8 million in net proceeds received, consisting of $18.5 million received in cash and $1.5 million that the acquirer paid into an escrow account that will be settled within 12 months of closing, less $0.2 million in transaction costs, over the $2.7 million net book value of the assets upon closing of the transaction.”)
Groupon also noted that it took $11.5 million in restructuring charges this quarter related to employee severance and other charges. The 10-Q notes that there were terminations for approximately 400 employees in the quarter, although a Groupon spokesperson said that overall the company has lost 45 employees as a net total, with 6,616 employees on Groupon’s books today.
Looking ahead, Krenzer’s appointment could be a signal that Groupon is getting ready to refresh its marketing activities, which still lean heavily on email among a mix of mobile apps, social media and the rest of the usual suspects. In line with that, alongside the new COO, Groupon also announced a new board member, Deborah Wahl, who most recently was the SVP and CMO of McDonald’s, USA.
“The opportunity to add a high-horsepower e-commerce leader like Steve doesn’t come along very often,” said Groupon CEO Rich Williams in a statement. “His combination of industry savvy, deep operational experience and intimate understanding of digital marketing is equally rare. Steve will immediately put those skills to work as we continue to advance our vast local marketplace.”