Groupon Posts Profit In Q2, But Misses View; Sees Weak Q3

(RTTNews) - Daily deals site Groupon Inc. (GRPN) on Friday reported a turnaround to profit in the second quarter, reflecting higher revenues and lower expenses as well as a gain on sale of the company's stake in its South Korean business.

However, adjusted earnings per share for the quarter missed analysts' expectations, while revenues were impacted by a stronger U.S. dollar. In addition, the company forecast financial results for the third quarter below the Street estimates, but affirmed its outlook for full-year revenue.

Groupon informs consumers about deals of the day through emails. But having faced stiff competition, the company is transforming itself into a broader e-commerce player from a company that only sells deals and coupons.

For the second quarter, the Chicago, Illinois-based company's net earnings were $109.08 million or $0.16 per share, compared to net loss of $22.88 million or $0.03 per share in the year-ago quarter.

The latest quarter's results include a gain of $0.21 per share on the Ticket Monster sale that offset loss from continuing operations.

In late May, Groupon said it completed the sale of a controlling stake in Ticket Monster, its South Korean e-commerce business, to a partnership formed by KKR and Hong-Kong-based Anchor Equity Partners, for $360 million.

Loss from continuing operations for the quarter was $15.27 million or $0.03 per share, wider than loss from continuing operations of $10.69 million or $0.02 per share in the year-ago period.

Excluding items, adjusted net earnings for the latest quarter was $13.81 million or $0.02 per share. On average, 21 analysts polled by Thomson Reuters expected the company to earn $0.03 per share. Analysts' estimates typically exclude special items.

Revenue for the quarter rose 3 percent to $738.40 million from $716.21 million in the year-ago period. Adjusting for the impact of foreign currency, revenues increased 10 percent. Analysts were looking for revenue of $740.25 million for the quarter.

Total operating expenses for the quarter declined 5 percent to $346.23 million.

Gross billings, which reflect the total dollar value of customer purchases of goods and services, increased 2 percent to $1.53 billion, with North America billings up 12 percent. Excluding foreign exchange impact, gross billings increased 10 percent.

Global units, representing vouchers and products sold before cancellations and refunds, increased 7 percent from the prior-year period to 53 million.

Active customers, or customers that have purchased a voucher or product within the last twelve months, grew 6 percent year-over-year, to 48.6 million as at the end of the quarter, and also increased from 48.1 million in the preceding quarter.

Looking ahead to the third quarter, Groupon forecasts adjusted earnings between $0.00 and $0.02 per share, on revenues in a range of $700 million to $750 million. Analysts currently expect the company to earn $0.03 per share on revenue of $755.88 million for the quarter.

For fiscal 2015, Groupon affirmed its outlook for revenues in a range of $3.15 billion to $3.30 billion. The Street currently expect the company to report revenue of $3.21 billion for the year.

The outlook for both the third quarter and full year anticipates nearly 600 basis points of unfavorable impact from changes in foreign exchange rates.

GRPN is trading at $4.44, down $0.24 or 5.13 percent on a volume of 2.26 million shares.