Groupon Posts Profit, But Misses Earnings Expectiations

Groupon’s latest quarterly results showed the company posted a profit, but looking ahead to what may come out of its current quarter, Groupon executives warned that the earnings would likely fall bellow expectations.

The second quarter boost was attributed to its sale of its stake in Ticket Monster for $360 million.

But for now, its quarterly profit of $337 million might be enough to keep investors happy. Still, that profit is lower than it was a year ago during 2014’s Q2 figure of $366.4 million. Revenue for the quarter increased 3 percent globally to $738.4 million, up from last year’s Q2 figures of $716.2 million.

“Our marketplace transition continues to gain steam as we delivered another solid quarter,” said Groupon CEO Eric Lefkofsky. “Adjusting for currency, all of our businesses in North America and abroad are now growing. Groupon remains an indispensable platform for small businesses while becoming more and more of a daily habit for customers.”

As for other key figures for the quarter, Groupon shared the following figures about how many deals are being made, how many customers are using Groupon and how much customers are spending.

Active deals were nearly 510,000 globally, with approximately 240,000 in North America. Both include the addition of approximately 75,000 coupons.

Active customers (defined by customers who have purchased a voucher or product within the last 12 months), hit 48.6 million in the quarter (a 6 percent growth). This is broken down to 24.9 million in North America, 15.5 million in EMEA, and 8.2 million in the rest of the world.

Spending per average active customer was $133, down $3 from last year’s Q2 average of $136.

Groupon’s big comeback most recently has been a result of branching out beyond discounted goods and deals to getting tied into the more eCommerce sites and local service markets. Just in the last year, Groupon added a tablet POS for small businesses. It also recently bought OrderUp, an online and mobile food delivery service. The company announced last week that it plans to expand into delivery and takeout with the launch of Groupon To Go.

During the company’s earnings call with analysts today (Aug. 7), Lefkofsky gave a little bit of insight into Groupon’s focus for its business model.

“We’ll continue to allocate time and resources in countries and businesses where we think we can win, and we will evaluate alternative structures that help us unlock shareholder value, and those where we question our long-term strategic positioning as we did in Korea. We made more progress here recently, with the partial sale of our India business to Sequoia, which Brian will discuss in greater detail in a minute,” he said.

“Moving onto our strategic and operating initiatives, our mission is to connect local commerce by providing better yield management tools to merchants looking to fill their open capacity, while offering consumers a seamless experience to which they can discover, book and buy locally. In order for our marketplace to thrive, we need more inventory. Just search for almost any category in almost any city and you will notice that we just don’t have enough inventory to fulfill many of our customers’ demands,” Lefkofsky continued.

While Groupon’s original model was focused on providing discounted goods and services, the company has since tried to market itself in other directions in order to broaden its reach with brands that don’t want to be associated with discount deals.

“Our goal is to attract merchants that don’t want to discount their products and services so heavily, but still want to access our large community. Merchant pages and the various market rate transactional products that we now offer allow merchants to sell their services at much closer to full price,” said Lefkofsky before wrapping up his comments that shared more about where Groupon plans to develop its business model for future growth to compete in the busy marketplace space.

“As you can see, we are laser-focused on completing the marketplace transformation that began a few years ago, adding more merchants to our platform and allowing our customers to buy, book, reserve, redeem, and pay for local goods and services seamlessly through our app.”