RetailMeNot Sales Beat Estimates as Web Coupon Use Climbs
RetailMeNot Inc. (SALE), an online coupon provider, reported revenue that beat analysts’ estimates in its first earnings announcement as a public company after more consumers used the site to search for discounts.
Second-quarter sales climbed 44 percent to $43.4 million, the company said today in a statement, beating the $42.2 million average analyst prediction, according to data compiled by Bloomberg. The company reported a net loss attributable to shareholders of $999,000 because of costs associated with preferred stock dividends.
RetailMeNot has gained popularity with its more than 500,000 coupons at online and physical stores, including Home Depot Inc. (HD), Walgreen Co. (WAG) and Amazon.com Inc. The Austin, Texas-based company, which provides discounts at more than 50,000 retailers, is vying for greater share of the high-margin Web coupon market as more consumers search for deals on their laptops and smartphones.
“Over the last decade, the emergence of digital coupons has changed the landscape,” Chief Executive Officer Cotter Cunnigham said on today’s conference call. “We didn’t invent the coupon and we didn’t bring it online. What we did do is create a marketplace.”
RetailMeNot has surged 43 percent since its debut on the Nasdaq Stock Market on July 18, for a market capitalization of about $1.5 billion. The stock fell less than 1 percent to $29.93 at the close in New York. The company and shareholders sold 9.1 million shares for $21 each in the initial public offering.
Third-quarter sales will be $45 million to $46 million, the company forecast on the call. Analysts on average are projecting revenue of $45 million, according to data compiled by Bloomberg.
Excluding expenses related to stock dividends, net income fell 5.6 percent to $5.12 million from $5.44 million in the same period last year because of increased investments in product development and sales and marketing, the company said.
By attracting customers mostly through online search and keeping down advertising costs, RetailMeNot had a 93 percent gross margin in the period. Its margin in 2012 was 94 percent, wider than any company in the Standard & Poor’s 500 Index and more than 20 percentage points higher than Groupon Inc. (GRPN) or Facebook Inc. (FB)
The U.S. online coupon market may reach 104.9 million by 2015, a 14 percent increase from 2012, according to EMarketer Inc. The researcher estimates the number of U.S. adult smartphone users who also use coupons will increase 32 percent to 40.8 million in 2013 from the prior year.
RetailMeNot’s mobile revenue more than tripled to $5 million from $1.4 million a year earlier, accounting for just 12 percent of total sales.
“Although mobile and in-store initiatives represent a potential growth runway and a means of driving multichannel engagement for RetailMeNot, the company is in the early stages of developing its mobile capabilities,” Mark Mahaney, an analyst at RBC Capital Markets in San Francisco, wrote in an Aug. 18 note to clients.
Cunningham , formerly chief operating officer at Bankrate Inc. (RATE), started the couponer in 2009. RetailMeNot offers promotions such as 20 percent off purchases at Macy’s Inc. (M), $30 off a Kindle Fire from Amazon and a $2 smoothie from Jamba Juice.
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