Groupon Tops View, But Shares Tank On Weak Q1 Outlook

(RTTNews) - Groupon Inc. (GRPN) Thursday reported a loss for the fourth quarter that was almost flat with last year, reflecting largely acquisition charges and impairments. Nevertheless, adjusted earnings for the quarter trumped analysts' estimates as did revenues.

However, shares of the daily deal website plunged 11 percent in extended-trade, after detailing some weak earnings outlook for the first quarter, with the company planning to increase marketing expenses. Groupon shares had initially surged 16 percent for a short time on the news of better than expected fourth-quarter earnings and revenues.

Looking forward to the first quarter, Groupon expects adjusted loss of $0.04 to $0.02, and revenues between $710 million to $760 million. Analysts currently estimate earnings of $0.06 per share on revenues of $668.61 million for the quarter.

In the first quarter, Groupon expects one-time costs of about $20 million related to the acquisitions of Ticket Monster and ideeli, with an anticipated additional spend of $25 million in marketing and growth initiatives.

Groupon had acquired Ticket Monster from peer LivingSocial Inc. for $260 million in November and Ideeli Inc for about $43 million last month. The company is in a path of acquisition-based growth as it attempts to revamp itself from a daily-deal coupon site to a marketplace for multiple deals.

Chicago, Illinois-based Groupon's fourth-quarter loss widened to $81.2 million from $81.1 million last year. On a per-share basis, loss was flat with last year at $0.12.

Excluding special items, adjusted earnings for the quarter were $0.04 per share. On average, 24 analysts polled by Thomson Reuters expected earnings of $0.02 per share for the quarter. Analysts' estimates typically exclude special items.

The daily deal website's revenue for the quarter grew 20 percent to $768.4 million from $638.3 million last year. Analysts expected revenues of $718.04 million.

Chief Executive Eric Lefkofsky said, "Our record performance in the quarter was led by strength in Goods, as shoppers increasingly looked to Groupon to fill their holiday needs."

Groupon's revenue growth was driven largely by strong performance at North America and EMEA, where revenues grew 18 percent and 43 percent, respectively, while Rest of the World dropped 15 percent.

Gross billings, the total amount collected from customers for goods and services, rose about 5 percent to $1.6 billion. Billings in North America increased 10 percent.

Groupon has been able to capitalize on consumer's increasing use of smartphones and tablets, as its mobile business continued to gain momentum with mobile transaction mix up more than 10 percent to about 50 percent in December. To date, more than 70 million people have downloaded Groupon apps worldwide.

Gross margin for the quarter dropped to 49.2 percent from 55.7 percent lat year.

GRPN closed Thursday's trading at $10.28, up $0.26 or 2.58%, on the Nasdaq. The stock, however, plunged $1.09 or 10.59% in after-hours trade.