Groupon Shares at 13-Month Highs on Q2 Earnings, Share Repurchase Plan

Andrew Klips |

Shares of daily deals company Groupon, Inc. (GRPN) are galloping ahead in Thursday morning trading after matching analysts on second-quarter earnings and topping revenue expectations following Wednesday’s closing bell.  Further, the Chicago-based company firmed up its chief executive officer position and announced a new share buy-back program, taking shares to their highest level since June 2012.

For the quarter, Groupon reported revenue of $608.7 million, up 7 percent from $568.3 million in the year prior quarter.  The company posted a net loss of $7.6 million, or 1 cent per share, compared to a net profit of $28.4 million, or 4 cents per share in Q2 2012.  Adjusted earnings, which exclude stock-based compensation and other one-time items, were $14.3 million, or 2 cents per share, which included a 1 cent per share negative impact from foreign currency exchange.

Wall Street was expecting adjusted earnings of 2 cents per share on revenue of $606.0 million.

Operating income was $27.4 million in the second quarter 2013, up by $6.2 million from the first quarter.  In the second quarter last year, operating income was $46.5 million.

Active customers, defined as people that have bought a Groupon in the past 12 months, grew to 42.6 million, up 12 percent year-over-year.  The company said that almost 50 percent of North American transactions completed in June were done on mobile devices, versus 30 percent in June 2012.

Global gross billings, which reflect the total dollar value of customer purchases of goods and services, excluding any applicable taxes and net of estimated refunds, were up by 10 percent to $1.41 billion from $1.29 billion in last year’s quarter.  Billings in North America surged 30 percent to $712.2 million, while EMEA billings gained 4.3 percent to $482.3 million.  The rest of the world saw a 20.5-percent decline in billings to $219.4 million.

Revenue in North America, far and away the biggest contributor, spiked 45 percent to $377.2 million from $260.2 million last year.

As of June 30, Groupon had $1.2 billion in cash and cash equivalents.

"We significantly exceeded our operating income expectations, and delivered our strongest quarter ever in North America, due in part to accelerated billings growth of 30%," said Eric Lefkofsky, chief executive of Groupon.

Notice Lefkofsky’s official new position. Andrew Mason was ousted from his position as top executive in February.  Lefkosfsky, chairman of the board, was serving as interim co-CEO with vice-chairman Ted Leonsis since Mason’s dismissal. Along with the earnings report, Lefkofsky was introduced as the new CEO, while Leonsis assumes the position as board chairman.

Groupon’s board also approved a two-year, $300-million share repurchase program.

Looking at the current quarter, Groupon sees revenue of between $585 million and $635 million and adjusted earnings between a loss of 1 cent per share and a profit of 1 cent per share.  Whether it’s a loss or a small gain, the outlook is still short of analyst expectations of EPS of 5 cents on revenue of $621 million.

Shares of GRPN have jumped ahead by 24 percent in early trading to $10.80.  With the move, shares are now up more than 100 percent so far in 2013.

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Companies

Symbol Name Price Change % Volume
GRPN Groupon Inc. 3.87 -0.02 -0.51 14,430,059
PLRCF Polar Resources Cp Ord n/a n/a n/a 0

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