Groupon Q4 Beats Street On Sales Of $925.4M, EPS Of $0.06, But Posts Weaker Outlook For Q1

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Groupon, the daily deals platform that has been making an effort to widen its business into local commerce and more mobile services, appears to be turning is ship around. Today, the company posted Q4 earnings with a 20% rise in Q4 revenues to $925.4 million on non-GAAP EPS of $0.06 and GAAP EPS of $0.01 — results that handily beat analyst estimates.

Analysts were expecting revenues of $908.38 million non-GAAP earnings of $0.03 per share. It also beat Groupon’s own Q4 guidance, which was between $875 million and $925 million for revenues on non-GAAP EPS of between $0.02 and $0.04.

Still, the market has been punishing the company after hours, with the stock down around 2% in after-hour trading on the back of a weak outlook for the quarter coming up. In Q1, Groupon has given an EPS range of break-even to $0.02, on revenues of $790 million – $840 million. Analysts had been expecting $0.02 and sales of $856.5 million.

“2014 was a transformational year for Groupon, as we made significant progress in our strategy to become the world’s leading local commerce destination,” said Eric Lefkofsky, CEO of Groupon, in a statemennt. “Global billings hit their highest level ever in the quarter, growing more than 30%, driven in part by our reignited North America Local business. We now turn our attention to further building out our marketplace to ensure that our more than 260 million subscribers have an amazing experience every time they use Groupon.”

Another milestone is that Groupon said that global units — vouchers and products sold before cancellations an refunds — exceeded 100 million for the first quarter ever, up 81% year-over-year to 101 million in total.

Last quarter, Groupon also beat revenue and earnings estimates on sales of $757.1 million and EPS of $0.03.

Groupon has been slowly building up its business in mobile and local commerce to diversify away from daily deals. That’s led the company to a range of acquisitions and product launches that move it deeper into payments and verticals like travel.

Many of Groupon’s newest developments have been launched in the U.S., its core market. Internationally, the company is supposedly looking at selling a majority stake in is Ticket Monster business in South Korea. Groupon acquired the stake in 2013 for $260 million.

While Groupon didn’t have any news on a sale of a stake in the company, right now Ticket Monster is an engine for growing the company’s growth internationally. Groupon today noted that while sales of global units were up 11% in North America and 20% in EMEA, they were up by a whopping 340% on the back of Ticket Monster sales.

However, it’s also a drag on the company’s earnings, with an operating loss of $16.2 million in the quarter, with $13.1 million from that related directly to Ticket Monster.

“The company announced last quarter that it is exploring a range of financing and strategic alternatives for its Asian businesses, including Ticket Monster. As part of that process, multiple parties have expressed preliminary interest in Ticket Monster, although it is too early to comment on structure, pricing or the likelihood of a transaction, as the process is still underway,” the company noted in its earnings. Excluding Ticket Monster, Rest of World was near break even in the quarter, it said, compared with a $14.7 million segment operating loss a year ago.

But Groupon doesn’t seem to be interested right now in selling the whole business. “We believe investment in Korea is essential for our company,” Lefkofsky said during the earnings call.

The international contraction comes at the same time that LivingSocial has sold its last non-English-language holding, Let’s Bonus, which operated a daily deals service in Spain, Portugal, Italy and Chile.

Drilling down into how the business performed, numbers were up across the board.

Groupon said that active deals were at 370,000 globally at the end of Q4 (versus 300,000 the previous quarter). Active customers were up 23% over last year to 53.9 million. Active customers are those who have purchased a voucher or produc within the last 12 months. More than half of its active customers — 24.1 million — are in North America, with 15.2 million in EMEA and 14.6 in the Rest of the World.

The company added another 10 million mobile downloads in the quarter, taking it to 110 million, and monthly unique visitors — including both mobile and web visits to Groupon — was over 160 million globally at the end of the fourth quarter 2014: the proportion between active users and visitors remains low.

Customer spend was up to $155, compared to $149 last quarter.

In terms of how users are coming to Groupon sites, the company (like its competitor LivingSocial) has been hit with a strong fatigue around getting those daily email shots and so it’s been trying to find other ways of luring people to its deals. Today Groupon said that 26% of its transactions came out of searches — up from 19% a year ago. Lefkofsky said that there are now 800,000 Business Pages created that are indexed to Google to drive search based on actual deals. This strategy was initiated in October last year and the plan is for there to be millions of these pages longer term.

We’re listening now to the call and will update this post with any more interesting details that we pick up.