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Groupon Narrows 1Q Loss With Lower Marketing Costs

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05/14/2012 | 10:42pm CET

Groupon Inc.'s (>> Groupon Inc) first-quarter loss narrowed on stronger-than-expected revenue growth and lower marketing costs.

Shares jumped 12% to $13.15 after hours as the company's core profit edged over Wall Street's expectations, building onto a 19% gain during the regular session. As of Monday's close, the stock was still off 36% since the end of March, when the company spooked investors by revising its fourth-quarter results downward.

Groupon has been working to regain shareholders' confidence after the company was blindsided by a pricier-than-expected list of customer refund requests, which forced the discount provider to clip $14.3 million from its fourth-quarter revenue. The mistake also reduced operating income by $30 million and aggravated its loss by four cents a share.

The company responded last month by naming two new directors to with financial backgrounds to its board, including Deloitte LLP Vice Chairman Robert Bass, who will stand for election at Groupon's upcoming annual meeting. Daniel Henry, chief financial officer of American Express Co. (>> American Express Company), has already replaced Starbucks Corp. (SBUX) Chief Executive Howard Schultz, who stepped down.

Groupon makes money by arranging deals with merchants looking to attract new business and splitting the proceeds. For a discounted $10 purchase at a sandwich shop, for example, Groupon might take $5 and give the rest to the shop. The company makes a point of telling users that refunds won't be a hassle.

The service, which went public in November, has grown since 2008 from a small Chicago-based website to a 10,000-person organization that generates more revenue overseas than it does in North America. The company in February said it was extending its international footprint on mobile devices with product rollouts in more than 30 countries.

In the latest quarter, Groupon posted a loss of $11.7 million, or 2 cents a share, compared with a year-earlier loss of $102.7 million, or 48 cents a share.

Excluding stock-based compensation, acquisition-related costs and other adjustments, the company earned 2 cents a share, compared with a 41-cent loss a year ago. The year-ago quarter also included a small impact from preferred shares. Analysts polled by Thomson Reuters were looking for a penny-per-share profit.

Revenue jumped 89% to $559.3 million, topping the company's February guidance, which called for a top line between $510 million and $550 million.

International revenue more than doubled, while revenue from North America grew 75%.

Marketing costs fell 49%.

The company also issued a second-quarter revenue outlook of $550 million to $590 million, bracketing analysts' average estimate of $559 million, according to a poll by Thomson Reuters.

-By Drew FitzGerald, Dow Jones Newswires; 212-416-2909; andrew.fitzgerald@dowjones.com

Stocks mentioned in the article : Groupon Inc, American Express Company
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Financials ($)
Sales 2017 3 151 M
EBIT 2017 90,8 M
Net income 2017 -78,0 M
Finance 2017 874 M
Yield 2017 -
P/E ratio 2017 -
P/E ratio 2018 1 109,52
EV / Sales 2017 0,55x
EV / Sales 2018 0,48x
Capitalization 2 619 M
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Mean consensus HOLD
Number of Analysts 18
Average target price 4,93 $
Spread / Average Target 5,9%
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NameTitle
Richard Williams Chief Executive Officer & Director
Eric P. Lefkofsky Chairman
Michael O. Randolfi Chief Financial Officer
Peter J. Barris Independent Director
Brad A. Keywell Independent Director
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