Groupon shares plunge over not-so-great 2013 earnings

Full year and Q4 earnings missed the mark, due in part to two major acquisitions

Groupon shares plunged more than 11% to $9.13 in after-hours trading following the company’s Q4 and full year 2013 earnings report. While the company posted higher than expected Q4 revenue, Q4 and full year net income came in well below expectations.

To be fair, Groupon has warned in advance that it made some big acquisitions last quarter that would affect its earnings outcome. In Q4, the company completed its acquisition of Ticket Monster from LivingSocial, and it snapped up flash sales site ideeli.

Consequently, while fourth quarter revenue came in at $768.4 million—well above the $718 million analysts were expecting—the company suffered a net loss of 12 cents a share when analysts were expecting a profit of 2 cents a share.

Full year numbers weren’t so great either. While analysts polled by Thompson Reuters were expecting full year revenue to the tune of $2.9 billion, Groupon came in with $2.6 billion. To be fair, that’s up from $2.3 billion in 2012, but a 30% growth in North American revenues was offset by an 8% decline in EMEA revenues and a 15% decline in the rest of the world.

And while analysts were expecting 25 cents a share in net profit for 2013, Groupon posted a net loss of 12 cents a share. Youch.

Global units (vouchers and products sold before cancellations and refunds) increased 11% year-over-year to 56 million in Q4. Meanwhile, active customers (those who have purchased a deal or good in the last year) grew 9% in 2013 to 44.9 million worldwide.

Mobile now accounts for 50% of all transactions worldwide. Some 70 million people have now downloaded the Groupon apps, with 9 million downloading them in the fourth quarter alone.

And how is Groupon’s shift to “pull” strategy coming along? Quite nicely, thank you. In December alone, some 8% of total traffic in North America searched the site, with customers that searched spending 50% more than those who didn’t. That said, customer spend was down in Q4 to $134 from $137 in the third quarter.

"Our record performance in the quarter was led by strength in Goods, as shoppers increasingly looked to Groupon to fill their holiday needs," said CEO Eric Lefkofsky, in a statement. "We're also excited to welcome Ticket Monster and ideeli to the Groupon family. The acquisitions bring scale, relationships, and category expertise, making Groupon an even better place to start when you want to do or buy just about anything, anytime, anywhere."

Groupon expects Ticket Monster and ideeli to contribute $50 million to revenue in the first quarter, but will also likely have a $20 million negative impact on EBITDA. The company is expecting $710 to $760 million in revenue in the first quarter of 2014.