Groupon Shares Hit on Revenue Miss, Down 85 Percent Since IPO

Andrew Klips  |

Groupon Inc. (GRPN) is taking a lumping in Friday morning trading as the daily deals company came up short of its own revenue forecast in the third quarter, citing weakness in debt-riddled European.  The Chicago, Illinois-based company reported that revenue increased 32 percent to $568.6 million, compared to $430.2 million in the year prior quarter, but shy of its prior guidance between $580 million to $620 million.  Excluding a $26.0 million impact from unfavorable currency exchange rates, revenue was 38 percent higher than Q3 2011.

For the quarter, Groupon posted a net loss of $2.98 million, or nil per share, compared to a net loss of $54.2 million, or 18 cents per share in the year prior period.  Analysts were expecting earnings of 3 cents per share and revenue of $591 million.

Revenue from North America leapt from $161.5 million in the quarter ended September 30, 2011 to $291.6 million in this year’s quarter.  International revenue, which is primarily derived from Europe, only edged up by three percent to $276.9 million.

Direct revenue, which includes the Groupon Goods business arm to sell products directly to consumers, rose sharply to $145 million.  Gross billings increased 5 percent to $1.22 billion in Q3 2012 from $1.16 billion last year.  The company also said that about one-third of North American transactions in October were completed on mobile devices, a 30-percent increase over October 2011.

“Our solid performance in North America was offset by continued challenges in Europe,” said Andrew Mason, CEO of Groupon. “Groupon Goods has evolved into a second major category that our customers clearly love.”

For the fourth quarter, Groupon expects revenue to fall in between $625 million and $675 million, in line with analyst predictions of $635 million.  Income from operations for Q4 is expected to be between $0 and $20 million, as opposed to the $15 loss that was recorded in the fourth quarter of 2011.

The company has only posted one profitable quarter (second quarter this year) since it went public at $20 per share in November 2011.  Shares have plummeted 85 percent since, including a 24 percent nosedive in early Friday trading to all-time lows $2.95.

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