Photo: Flickr, CC / diloz
Groupon’s stock is down 26% at the time of writing, less than a day after its Q2 2012 earnings call in which the company revealed a first-ever profit on the bottom line, improved operating income, and a 45% increase in revenues to $568 million.So why did Wall Street react by bailing out of GRPN?
The main reason seems to be that growth is slowing at the company. Total billings—the fees Groupon collects from customers before remitting a portion to merchants making the daily deal offers—declined 5%.
But Groupon CEO Andrew Mason also showed investors this set of slides and charts on the performance of his company. Before the call, GRPN stood at ~$7.50.
After investors looked at this deck, GRPN sank to $5.60.
The slides show that, broadly, Groupon appears to be healthy. But some of the details show cause for concern.
On at least three of Groupon’s own metrics—billings, billings per customer, and salesforce headcount—the company appears to be shrinking.
We’re presenting a selection of edited highlights here/ We’re not including the boring stuff, such as Groupon regulatory disclaimers and its accounting reconciliations.
This is the broad overview. At first, all looks well. Revenue came within guidance and operating income beat the guidance.
This chart, however, is the first sign that all is not well. Sequential revenue growth has all but stopped.
This slide has an interesting controversy within it. The left side shows Groupon is getting much more bang for its marketing buck. But the right side shows that the company is failing to add new customers—only 1.1 million active customers joined worldwide in Q2. Is customer growth slowing because marketing was reduced? Or has Groupon simply maxed out its customer base?
In some ways, this is the worst chart Groupon had to offer. The part highlighted in yellow indicates that billings per customer are down, and Groupon's salesforce has been reduced by 148 staff. Coupled with the gross billings decline, Groupon appears to be shrinking, not growing. (Total headcount is up, however.)
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