) reported loss per share of 5 cents (including stock-based
compensation but excluding non-operational loss of 47 cents) in
the fourth quarter 2012, which was wider than the Zacks Consensus
Estimate of a loss of 2 cents per share. The non-operational loss
was associated to the impairment of a cost method investment in
However, when compared on a year-over-year basis, loss per
share improved from 8 cents incurred in the year-ago quarter.
This improvement was primarily due to higher revenue base.
Though revenues increased 29.7% year over year to $638.3
million, it marginally missed the Zacks Consensus Estimate of
$639 million. Sequentially, revenues were up 12.3%.
Region-wise, revenues from North America was up a staggering
108.9% year over year to $375.4 million, aided by robust direct
and third-party revenues. However, Groupon's international
revenues decreased 15.9% year over year to $262.9 million due to
lower direct revenues.
The strong year-over-year revenue growth was primarily due to
higher gross billing, which increased 23.5% year over year to
$1.52 billion in the reported quarter. This year-over-year growth
can be attributed to a steady increase in the number of active
customers, which stood at 41 million as of Dec 31, 2012.
In North America, Groupon's active customer count grew 22%
year over year to 17.2 million and its international customers
count jumped 21% to 23.8 million.
The company reported an operating loss of $12.9 million, which
was narrower than $15 million lost in the year-ago quarter.
Sequentially, the company's loss widened from a profit of $27.9
million, primarily due to growth in the lower margin direct
business and investments to expand local merchant base.
Net loss (including stock-based compensation but excluding
non-operational loss was associated to the impairment of a cost
method investment in China) came in at $30.5 million, which was
narrower than a loss of $42.2 million in the year-ago
Groupon exited the fourth quarter with cash and cash
equivalents worth $1.21 billion and the company had no debt. Cash
flow from operating activities was $65.7 million while free cash
flow was $25.7 million at the end of fourth quarter.
For the first quarter of 2013, Groupon provided a tepid
outlook. The company forecasts revenue to increase in the range
of 0% to 9% to $560 million to $610 million, lower than the Zacks
Consensus Estimate of $646 million.
Groupon expects operating income to be in the range of ($10.0)
million to $10.0 million for the first quarter.
We believe that Groupon is well positioned to gain from rising
e-commerce spending on mobile devices, a profitable domestic
market and an under-penetrated international market. We expect
these opportunities to continue to drive top-line growth going
However, we believe that the market is getting more
competitive due to the growing interest from technology stalwarts
). Moreover, a volatile macro economic environment and continued
investments to expand its merchant base are expected to impact
results in the near term.
Currently, Groupon has Zacks Rank #3 (Hold).
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