Groupon Posts Loss But Revenue Tops, Lefkofsky Confirmed CEO; Shares Surge 20%

(RTTNews) - Groupon Inc. (GRPN) Wednesday reported a loss in the second quarter from a profit a year ago, hurt mainly by weak margins and stock based compensation expenses. Groupon also confirms Eric Lefkofsky as the Chief Executive Officer and Ted Leonsis as Chairman. The company also revealed plans to buy back $300 million of its shares.

Shares of the daily deal website rallied 20 percent after its revenues for the quarter grew more-than-expected, as demand for its coupons continues to rise helped by smartphone and tablet users.

"We significantly exceeded our operating income expectations, and delivered our strongest quarter ever in North America, due in part to accelerated billings growth of 30%," said Lefkofsky. "With two quarters on the job, I'm pleased with the progress we've made in such a short time."

Groupon had ousted its co-founder and CEO Andrew Mason in late February, a day after the company reported disappointing fourth-quarter results. The company had then appointed Executive Chairman Eric Lefkofsky and Vice Chairman Ted Leonsis as interim CEOs. Groupon now has permanently named Lefkofsky as CEO and Leonsis as Chairman. Mason co-founded Groupon in 2008 with Lefkofsky and Bradley Keywell.

The daily deal website's revenue for the quarter grew 7 percent to $608.7 million from $568.3 million last year. Analyst polled by Thomson Reuters estimated revenues of $606.23 million for the quarter.

Groupon's revenue growth was driven largely by strong performance at North America, where revenues grew 45 percent, while EMEA slipped 24 percent and Rest of the World dropped 26 percent.

Gross billings, the total amount collected from customers for goods and services, rose about 10 percent to $1.41 billion.

Groupon's shares has rallied since Eric Lefkofsky and Ted Leonsis were named interim co-CEO's, and both have played a part in transforming the company with new avenues for revenue growth.

Groupon has been able to capitalize on consumer's rising use of smartphones and tablets. The company said that nearly 50 percent of its North American transactions came from mobile in June. To date, more than 50 million people have downloaded Groupon apps worldwide.

Revenue growth was driven mainly by increase in direct revenues, as sales from its e-commerce site continues to flourish while daily discount deals continue to soften. However, the problem with e-commerce sales is compounded with lower profit margins.

Groupon's margins has been significantly impacted due to costs incurred to ship physical goods. Cost of direct revenues increased to $168.5 million from $58.2 million last year. Gross margins dropped to 63.2 percent from 76.2 percent a year ago.

Chicago, Illinois-based Groupon's second-quarter loss was $7.6 million or $0.01 per share, compared to a profit of $28.4 million or $0.04 per share last year. Excluding special items, earnings were $14.3 million or $0.02 per share. On average, 24 analysts polled by Thomson Reuters expected earnings of $0.02 per share for the quarter. Analysts' estimates typically exclude special items.

Total operating expenses declined to $357.3 million from $386.7 million a year ago. Marketing costs for the period dropped to $55.5 million from $88.4 million last year.

Looking forward to the third quarter, the company expects revenue of between $585 million and $635 million. Analysts currently estimate revenues of $621.59 million for the quarter.

GRPN closed Wednesday's trading at $8.72, up $0.02 or 0.23%, on the Nasdaq. In after hours the stock surged $1.78 or 20.41%.