Groupon reported a wider-than-expected loss during the second quarter, as it continued its efforts to restructure its core voucher-based business model and expand its international business.
The company missed Wall Street expectations for both earnings and revenue targets, however, management noted that some of the disruption in its North American business would continue as it moves toward its long-term business goals.
CEO Rich Williams said, on a conference call with analysts, the company is “willing to disrupt its North American voucher business and work through some gross profit headwinds” in order to grow the company long term.
Groupon said that at the end of June, it had about 5.1 million customers enrolled in its Groupon+ loyalty program, which is designed to offer customers voucher-free discounts that link to charge cards, while also providing them with rebates when they use the program. Williams said the company has begun testing Groupon+ in one market.
In addition, Groupon is also making significant progress driving mobile use, with 183 million mobile downloads to date, and 70 percent of transactions taking place on mobile devices.
The company has also expanded new partnerships in 2018, including deals with Major League Baseball, CoreSource, GrubHub, American Express and others. He said these deals should help bring tens of thousands of buying opportunities to the platform in the coming quarters. Overseas, Groupon has added partnerships with Viator UK, Cirque du Soleil and FTD.
The firm said that gross profit fell 6 percent in North America to $219.4 million and noted that it had 32.2 million active customers in the region by the end of June. However, it saw improved results in its international business, as gross profits rose 11 percent to $104.3 million and international active customers reached 17.1 million.
The company took a $75 million hit during the quarter, after IBM won a patent infringement lawsuit — Groupon executives said the company will vigorously contest the verdict and file an appeal.
Groupon has, according to a report by Recode, been looking for a buyer in recent weeks, however, the company did not get into any specifics about whether it had substantive discussions with anyone in particular. The company did acknowledge that — based on some of its recent moves to bolster operations — it would likely draw outside interest.
The company reported non-GAAP earnings of $10.7 million, or two cents a share, compared with $12 million in the year-ago quarter. How did this net against expectations?
Revenue fell 7 percent in the quarter to $617.4 million, down from $662.6 in the year-ago period. Analysts had expected the company to earn three cents a share on revenue of about $632.5 million.