earnings on Monday evening
that far exceeded expectations. The daily deals site, based in
Chicago, reported earnings per share of $0.02, beating the Wall
Street estimate of $0.01. Revenues for the first quarter came3 in
at $559.3 million, well ahead of the Wall Street estimate of
All of the signs are there that Groupon is growing up,
bringing some much needed credibility back to the company are
should be taken seriously going forward. However, it should be
noted that the hard work is still to come. One can rest assured
that nobody knows this better than CEO Andrew Mason. He will know
that one quarter doesn't make a trend.
Recent reports that Mason was
seen drinking beer while telling employees that
the company needs to grow up
can apparently be taken as a positive and, while Wall Street will
likely remain cautious and even skeptical for a while, this a
solid step in the right direction.
Mason said that the company is using technology to better
target deals at specific customers, resulting in better purchase
rates and higher spending from GRPN's 37 million customers.
Statistics suggest that deals within a 5 mile radius of a
customer has a five times higher chance of resulting in a sale.
Even in the internet age, people seem to prefer to buy an item
from a local seller. Of course, when the deal relates to
something like a restaurant or a massage, this makes total
Analysts are concerned, however, that this "targeted" approach
requires more deals to pick from on the GRPN system, which in
turn will require more salesperson on staff. Mason doesn't see a
problem with that, saying "I think we'll see that increase. We'll
be adding more front-line sales force."
The company also seems to be improving its take rate - the
amount of money it keeps from what it makes. It is spending less
on marketing, and the Groupon Now mobile product is doing
It now has 36.9 million active customers, and it served over
100,000 unique merchants in the first quarter. Groupon's
operating profit was 7% in 1Q. Wall Street was expecting
Still, analysts will continue to be concerned by added costs.
Marketing spending was cut almost in half, but sales and
administrative overhead nearly doubled to $283.5 million.
So yes, there is reason for optimism going forward, but it
should be cautious optimism.
(c) 2012 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.