) reported a loss per share of 1 cent (including stock-based
compensation but excluding acquisition-related benefit) in the
second quarter of 2013, which came in narrower than the Zacks
Consensus Estimate of a loss of 3 cents. On a year-over-year
basis, Groupon's loss per share worsened from the year-ago
quarter's earnings of 4 cents.
Groupon's revenues of $608.7 million lagged the Zacks
Consensus Estimate of $613.0 million despite a 7.0% increase from
the year-ago quarter. Region wise, revenues from North America
increased 45.0% year over year which more than offset the 24.0%
and 26.0% declines in revenues from EMEA and Rest of the world
(Asia-Pacific and Latin America), respectively.
The strong year-over-year revenue growth was primarily due to
the higher gross billing, which increased 9.3% year over year to
$1.41 billion. This year-over-year growth can be attributed to a
steady increase in the number of active customers (up 12.0% year
over year), which stood at 42.6 million as of Jun 30, 2013.
The company reported that 50.0% of the transactions in North
America were through mobile devices which increased from 30% in
the year-ago quarter. Moreover, more than 7.5 million people
downloaded Groupon's mobile apps during the quarter, which led to
a robust mobile business.
Gross profit for the quarter was down 11.2% from the year-ago
quarter to $384.7 million primarily due to take-rate reduction in
the International segment. The company reported an operating
income (excluding stock-based compensation and
acquisition-related expenses) of $59.0 million, which decreased
from $71.9 million in the year-ago quarter.
Groupon's net loss (including stock-based compensation but
excluding acquisition-related expenses) was $7.6 million which
worsened from $28.4 million net profit in the year-ago
Groupon exited the second quarter with cash and cash
equivalents worth $1.18 billion. Cash flow from operating
activities was $43.3 million. The company authorized a $300
million share buyback plan.
For the third quarter of 2013, Groupon forecasts revenues to
increase in the range of $585 million to $635 million. The
company expects earnings per share in the range of negative 1
cent to a positive 1 cent.
Groupon expects operating income (excluding stock-based
compensation and acquisition-related expenses) in the range of
$20.0 million to $40.0 million for the next quarter.
We believe that Groupon is well positioned to gain from the
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.
Moreover, Groupon's increased traction in the mobile business is
another positive for the company.
However, we believe that the market is becoming 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
Groupon carries a Zacks Rank #3 (Hold).
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