Groupon's first quarter sans Mason beats expectations

Faith Merino · May 8, 2013 · Short URL:

Shares were up 10% in after-hours trading

Wow, so maybe canning Andrew Mason was a pretty smart business move. Groupon's first quarter without Mason also happens to be the best quarter it’s seen in a year. Shares popped 12.5% in after-hours trading to $6.29 after the company’s quarterly results beat expectations.

Non-GAAP operating income (excluding stock compensation) came in at $51.2 million, or $0.03 a share on revenue of $601.4 million. Street consensus called for non-GAAP operating income of $29 million on revenue of $591.3 million.

While revenue was up 8% over last year ($559.3 million), gross profit was down to $379 million from $438.9 million in the same quarter a year ago.

"We are encouraged by our results, as our local revenues accelerated and our margins improved over the prior quarter," said Eric Lefkofsky, Chairman and co-CEO of Groupon, in a statement. "We had record mobile performance as 45% of our North American transactions came from mobile in March, and more than seven million people downloaded our apps in the quarter."

In case you missed that—nearly half of all North American Groupon transactions are now coming from mobile. That’s up from 30% this time last year.

It’s not all sunshine and roses yet. After one year on the job, Groupon Goods VP Faisal Masud will leave the company next week to lead Staples’ online and digital business. That’s pretty dismal news, considering the fact that Groupon is relying more and more on its Goods business to keep up its momentum as its coupon businesses slows down.

Masud follows former Groupon CEO Andrew Mason, who was unceremoniously sacked in March following the company’s dreary Q4 2012 earnings report, which caused share prices to drop 20%.

Additionally, while North American sales were up 37%, international sales were down 18%. But as Sterne Agee analyst Arvind Bhatia notes, the international segment is key to Groupon’s turnaround.

“The company is in the early stages of introducing ‘SmartDeals’ in the international markets. In the U.S., SmartDeals resulted in a 30% lift in transactions in the past. SmartDeals were recently added in the U.K. market and will be added in other international markets in the upcoming quarters. In addition, technology automation is expected to lower operating costs and boost profitability,” wrote Bhatia in a research note.

Groupon is offering guidance of $575-$625 million in revenue in the second quarter, with operating income of $20-$40 million. 


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