Groupon Surges After Revenue Beats Estimates on Mobile Gains
Groupon Inc. (GRPN) shares jumped the most in more than two months after the daily deal website’s first-quarter revenue surpassed analysts’ estimates, buoyed by increased coupon sales through its mobile applications.
Sales rose 7.5 percent to $601.4 million, the Chicago-based company said yesterday in a statement. Analysts on average projected $591 million, according to data compiled by Bloomberg. The net loss narrowed to $3.99 million, or 1 cent a share, from $11.7 million, or 2 cents, a year earlier. Analysts had estimated a loss of 2 cents.
Co-Chief Executive Officers Eric Lefkofsky and Ted Leonsis have helped stabilize the company while they search for a replacement for Andrew Mason, the Groupon co-founder they ousted as CEO in February amid faltering growth. The company’s apps for mobile devices and new personalization features are helping Groupon expand its share of the daily deal market, said Tom Forte, an analyst at Telsey Advisory Group in New York.
“They are taking share of the North American deals market from LivingSocial and from Google,” Forte said in an interview. “They outperformed against some modest expectations.”
Revenue in the current period will be $575 million to $625 million, the company said in the statement. That compares with an average analyst estimate of $617.7 million.
Groupon shares rose 13 percent to $6.30 at 9:33 a.m. in New York, and earlier touched $6.40 for the biggest intraday gain since March 1. The stock had advanced 15 percent this year through yesterday, compared with a 14 percent gain for the Standard & Poor’s 500 Index.
North American revenue in the first quarter climbed 42 percent to $339.6 million, while international sales fell 18 percent to $261.8 million. That drop also represented the fourth straight sequential decline in overseas revenue.
Coupons sold on mobile devices accounted for 45 percent of all transactions in North America in March, up from less than 30 percent a year earlier, the company said. The increase was driven by product improvements such as mobile search as well as growth in the number of local deals offered via wireless devices, Chief Financial Officer Jason Child said in an interview.
“Mobile is the key story in North America,” Child said.
The company makes money by offering consumers discounts -- known as Groupons -- from businesses such as restaurants and nail salons. It then shares the revenue with the businesses.
Groupon Goods, a service started in 2011 to help retail companies such as Dell Inc. (DELL) and Garmin Ltd. (GRMN) peddle thousands of marked-down items via two-day sales, totaled $165.4 million in billings in the first quarter, more than double from a year earlier, when the unit contributed $78.2 million in billings. Billings represent the total value of items sold through the site.
Mason was fired on Feb. 28, a day after the company forecast first-quarter sales that missed estimates, causing the stock to plunge 25 percent. Pressure had been mounting on Groupon to seek a new CEO as Mason struggled to cope with a drop in coupon demand.
While the board has formed a committee and started the process of looking for a new CEO, Leonsis said Groupon isn’t going to make a rushed decision.
“The search is under way,” he said on a conference call. “We’re not in a hurry. The leadership team is very strong and is gelling very nicely.”
Lefkofsky and Leonsis have emphasized making Groupon more transparent with more disclosures to investors, Child said. The co-CEOs have also narrowed the company’s focus, he said.
“You are seeing us now focus on a smaller number of things that will have impact in 2013,” Child said.
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