Groupon’s numbers are out!It looks like a beat on the top line and miss on the bottom line.
The earnings miss appears to be driven by a tax expense.
Shares were down as much as 15% in reaction to the release. They bounced back, and are down 7% as of 4:30eastern.
Our editor-in-chief, Henry Blodget, thinks it could be a short squeeze that drove the stock higher in the first place. He says the “numbers are totally fine.”
Indeed, the company had $15 million in operating profit, and cash flow for the fourth quarter was $169.1 million.
Herer are the numbers versus estimates where available:
- EPS: -$0.02 vs. $0.03 (Street estimate via Yahoo)
- Revenue: $506.5 million $475.15 million (Street estimate via Yahoo)
- Revenue guidance: $510-$550 million versus $513 million (estimate by JP Morgan)
- Total Billings: $1.25 billion versus $1.21 billion (estimate by JP Morgan)
- Active customers: 33 million versus 30 million (estimate by JP Morgan)
- Operating income: $15 million versus -$13 million (estimate by Morgan Stanley)
We’re listening to the earnings call and we’ll dash off interesting things we hear. For the latest, click here.
4:33: Mason: Revenue was $1.6 billion and gross billings over $4 billion for the year. Operating profit for the quarter was the first time we had an operating profit. Free cash flow tripled year over year.
4:35: We’ve increased tech headcount. Opened a new office in Palo Alto. Grew core daily deal and Groupon Goods, and Groupon getaways.
4:37: There are several key drivers for profits: Strong repeat purchase behaviour. It’s durable over time, decreases incremental marketing spend. Our marketing is more efficient. Just 30% of our revenue. Third, we are more operationally excellent.
4:39: We still have less than 1% of local transactions … still enormous optty. Still early days. On the cusp of sea change.
4:41: Now the CFO is taking over, running through the numbers.
4:44: Marketing down 22% y/y and down 8% q/q. As of the end of the year, sub acq is primary spend of marketing. Still early stages internationally.
4:46: CSOI was $48 million compared to $143 million loss in the year prior.
4:48: Income tax was $0.07 per share, related to international office expansion.
4:57: Mason: We think people should focus on net revenue. A lot of noise on take rates, they go up or down. Depending on deal mix, maturity of categories. Focused on net revenue and free cash flow and CSOI.
4:58: Can we get more colour on the tax?
CFO: Total tax expense 7 cents. 3 cents relates to international HQ in Switzerland. Over time we expect as all of our countries are profitable, see a low 30s ETR. (effective tax rate).
5:00: New question: $40 mill in loses in less mature markets … ?
CFO: Sure, oldest best market is U.S. where we made about $35 million. And saw growth accelerate. That’s what we want to see in all countries. Expect progress over the balance of the year, get all regions to be profitable in the next year or two.
5:01: Tech headcount increasing by 4 Times? What are the priorities? What degree you expect pace to continue?
Mason: Headcount supports existing products like getaways and Now. These new products like rewards are more technologically complex. Pretty remarkable, magical stuff we think will make a more comprehensive marketing suite for customers. Expect to invest aggressive in additional headcount.
5:05: Goldman analyst just made a joke about pole dancing deals: Andrew, you can keep sending out those pole dancing deals.
5:06: Mason: A lot of stuff about how we’re getting smarter in marketing. More investment in marketing that drives purchases. At same time, w. introduction of Goods, Now, travel, better personalisation, becoming a product people love. per cent of organically acquired customers has improved.
5:08: Meanwhile, GRPN is back down 13%.
5:10: Merchant satisfaction? Repeats from merchants?
Mason: We’re happy with merchant numbers. Happy they repeat. Nielsen said it found that 3 of 4 people that use a groupon bring a friend w. them. We did a deal w Lionsgate for a movie. For every person that heard about it thru Groupon only 1 of 3 bought group. Only 7% of those that bought it would have seen it anyway. That data gets us excited.
5:13: Barclays question … are you accepting reviews on site? How do you do measure customer satisfaction? Repeats? Margin profile of international?
5:14: Mason on customer satisfaction … we do collect feedback. Started 4-5 months ago. We email and ask about experience. Seeing high engagement, collecting reviews. We can flag anything exceptionally good or poor. On top of that, we survey customers frequently. We look at cohort behaviour. Past cohorts continued to purchase in Q4 as prior quarters.
5:23: CFO talking about marketing spend as % of revenue, says it will continue to fall.
5:23: Can you talk about acceptance for new products?
Mason: We feel great about how well the assets we’ve acquired have translated. Operational infrastructure, as well as consumer base, who we’ve learned think of GRPN as good deals.
LAST QUESTION! More clarity on get away product?
CFO: It is w. Expedia, but we source w. our own travel salesforce. It is broadening from sales perspective. expect to see us add more features. In terms of Q1 how much Goods or get aways will be, we’re not going to disclose at this time, too competitive.
And that’s that!
For the latest, click here.
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