Groupon jumps 25% on strong results
Shares of Groupon (NASDAQ:GRPN) traded higher by more than 25% early Thursday morning as the company reported its earnings after the market close on Wednesday. Over the last few years Groupon shareholders have been victim to great price swings and even fears of solvency. Since the company’s highly publicized initial public offering just a few years ago, shareholders have drastically underperformed the broad market. However, shares have done especially well so far this year. Excluding the extended hours move, shares are up nearly 80% year to date as long term profitability and shareholder rewards seem to now be the focus of management.
The company reported a net loss of $7.6 million, or $0.01 a share, compared to net income of $28.4 million, or $0.04 a share reported in the second quarter of last year. Revenue increased 7.2% to $609 million from $568 million a year ago. The result came in largely in line with analyst expectations, analysts had expected Groupon to report earnings excluding items of $0.02 a share on $606 million in revenue, according to a consensus estimates. The number of vouchers and products sold before cancellations increased 15% globally to 46 million. If you look at the results by geographic distribution, you will see the company did especially well in North America, growing by more than 45%.
While the daily deals space has grown increasingly competitive over the last few years, Groupon has looked to diversify its business to ensure its relevancy. Renewed focus on the company’s mobile platform help grow the company’s subscriber base. More than 7.5 million people downloaded a Groupon mobile app worldwide in the quarter, bringing the total count above 50 million. These second quarter results follow the announcement earlier this month that the company would be looking to combine its daily deals service with the online booking to open up an entirely new revenue stream. The service, Groupon Reserve, is said to be “the premiere destination for the finest things to eat, see, do and buy.”
Additionally the company announced a $300 million share repurchase program set to begin shortly. In the remainder of the week it will be interesting to see in analysts update their full year guidance to reflect the results.
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