Groupon's CEO on stock surge: 'We're confident in our progress but we still have a lot of work to do' (GRPN)
Groupon
Groupon announced stronger than expected earnings on Thursday. Wall Street was pleased with the deals site's revenue of $917.2 million against expectations of $845.9 million, and Groupon stock skyrocketed 27% on Friday morning in response.
It's a big win for Groupon's new CEO Rich Williams, who took over in November after a rough couple of years for the company following its IPO in 2012.
Williams first joined Groupon back in 2011 after a 3-year stint at Amazon, and is currently attempting a big turnaround at the company during a time when many doubt how lucrative the daily deals business really is.
We talked with Williams on Friday morning to get a sense of his response to the stock's huge jump, how his big plan to streamline the company is coming along, and what it all means for Groupon in the upcoming year. Here are his comments, edited for length and clarity.
Business Insider: That was a huge earnings beat. What are your feelings when you see the stock up more than 25% this morning — what are the feelings in the office right now?
Rich Williams: We're obviously pleased to see the reaction move in the direction it is. We're excited about the Q4 we had. We had a really strong holiday season; I think you saw the Groupon brand and its rooting in value and savings for customers really work and hit its stride in a great way. Ultimately, it helped us deliver results that were beyond our expectations, let alone Wall Street's.
So the team obviously feels good about that. They see progress, and a lot of progress over the last couple of months on our core initiatives. So net, everyone's feeling pretty good about it, and people are feeling encouraged by the results — both inside and outside the company — and I think for the right reasons.
BI: So the big question right now is whether this is proof that your big streamlining initiative and turnaround is working or just a brief comeback during the holidays. What do you say to those that doubt the deals market, and how do you ensure you follow up last quarter with a strong 2016?
Williams: Streamlining and simplifying the business is one of those things we made a lot of progress on over the last couple of months, reducing our footprint, focusing in on where we need to operate, where we believe winning is material, and where we're in a good place to win.
We're also focused on growing our customer base, investing more in marketing to drive our customers to the platform and marketplace — we made real progress on that in Q4.
You saw us also make real progress in increasing our shopping margins and really moving away from empty calories. I mean you can see it in the profit growth profile of the shopping business and our margins overall in the shopping business making a huge jump forward — almost 150 basis points year on year, so that's all working.
You're seeing us focusing on the customer experience and really making Groupon great for customers and merchants all around, end to end, which is more than just a product it's us moving and being world-class in service.
I think what you saw in Q4 is progress against all of that, and it translated into the results that we had, and into our longer-term outlook for 2016. We did move faster than expected on the streamlining efforts, and that allowed us to drop a little bit of additional profit to the bottom line, and even in our shopping efforts we made real improvements on our supply chain and logistics, which are sustainable throughout the year, and should improve the profile of that business throughout the year.
So we feel good about our progress is shaping up, but the reality is we're a quarter in to four really big, long-term initiatives, and we need to prove that we can continue to make progress outside of the fourth quarter and holiday season against those initiatives and that they'll drive the results we need them to drive. So we're confident in our progress but we still have a lot of work to do.
BI: Reducing the company's footprint was one of your top priorities when we talked a few months ago. Can you get into specifics on how that goal was executed during the last quarter and what your efforts will be to further streamline Groupon in the upcoming year?
Williams: At this point, we're happy with our progress on that front, I mean we exited 17 countries in about 100 days. We moved fast to get us into that place — faster than we thought we would — so we're feeling pretty good about the footprint right now.
But like any good management team and any good company, we're going to continue to evaluate as we learn more and go throughout the year. But we're in the place now where we have the ability and the bandwidth to focus on our top countries — North American and our top countries around the world like UK, France, Germany, Italy, Australia — so we're feeling pretty good.