Groupon shares rocket on better-than-expected Q1

Groupon is showing better growth in North America, mobile

Groupon (NASDAQ:GRPN) shares soared Tuesday, after the daily deals company posted first-quarter results and a second-quarter outlook that beat analysts' expectations.  

Groupon reported late Monday that earnings, on an adjusted or non-GAAP basis, came in at  2 cents a share, or $16.3 million, on revenue that rocketed 89% to $559.3. Analysts polled by Thomson Reuters were expecting adjusted earnings of 1 cent per share on revenue of $530.6 million. 

On a GAAP basis, Groupon reported a net loss of $11.7 million, or 2 cents a share, which is significantly narrower than its net loss of $146.5 million or 48 cents a share for the year-ago period. 

Groupon also said it expects revenue in the current quarter to be between $550 million and $590 million, above Street expectations of $559 million.  

On the news, Groupon rose 12% to to $13, in recent trading. Shares had already gained 18% in Monday trading, in anticipation of solid results. 

In addition, some analysts were encouraged by Groupon's revenue growth in North America. Sales in that region grew 33%. "While billings, revenue, margins, and guidance all met or exceeded, signs of accelerated North American revenue shows that the company's technology efforts around personalization and, to a lesser extent, mobile and rewards, are paying off," Evercore Partners analyst Ken Sena wrote in a note.

Sena raised his price target on the stock to $17 from $15 and remained strong with a "buy" rating.   

International and mobile

Groupon generated 57% of its revenue outside the U.S. in the past quarter.  Analysts, for months, have been interested to see just how much the company would be able to gain ground across the globe, since many expected that the US was at its saturation point for daily-deals sites and similar marketing solutions.

Groupon reported that its international sales more than doubled to $320.7 million. 

While North America revenue grew 33% quarter-over-quarter, some are pointing out that the International growth has decelerated 3% since the previous quarter and should be observed to see how it changes next quarter.

JP Morgan's analyst Doug Anmuth stated in an investor note that he remains neutral on Groupon at $22, but he does raise his 2012 North America revenue estimate to $257.0 million from the $184.4 million expectation he had previously.

Anmuth also pointed out the North American growth "was driven by increases in deal density as well as improvements to the technology platform which led to better targeting. Groupons per customer and average price per Groupon increased slightly quarter-over-quarter, and we believe Groupon benefited from strong customer growth in North America during the quarter."

As North America has picked up, much of that could be due to the efforts Groupon has made in making its company more mobile-friendly. Roughly 30% of Groupon’s transactions in North America were done on mobile phones in April, up from 25% from the previous quarter, Chief Executive Officer Andrew Mason said in a letter to shareholders last week.

While this report was far cheerier than expected, many analysts are holding out to see how the shares trade when the lock-up period ends in June and shareholders can liquidate their stake in the company.