What Groupon Inc. (NASDAQ:GRPN) Should Have Done Differently?
A strong growth in North America helped the daily coupon website Groupon Inc. (NASDAQ:GRPN) of offset decline in international revenue and post 3Q13 profit, above consensus estimates. North America proved to be the fastest growing regions for Groupon with 24% revenue growth during 3Q13, largely offset by 21% revenue decline in Europe, Middle East and Africa region. A key indicator reflecting gross amounts collected from customers – Gross billings grew 10% to $1.34 billion during 3Q13.
The company reported over 40% of global transactions from mobile devices and over 50% of total transactions from North America region. While active customer base grew 10% to 43.5 million during 3Q13 compared to 3Q12, the company reported installation of Groupon application on more than 60 million mobile devices. The company has been focusing on mobile centric strategy since early this year following steep decline in its core, emailed daily deals model over the past year. The company has reinvented its business as more tradition e-commerce platform and has also been building ‘Pull’ – an online marketplace that allows people search for and buy deals in their locality.
Groupon’s Chief Financial Officer, Jason Child mentioned that as the company invested more to expand the number of merchants Groupon partners with, revenues from Europe was down for the period and are expected to turnaround in the coming quarters. Groupon’s co-founder and CEO, Eric Lefkofsky mentioned about management intentions to invest more in Asia and Latin America to drive sustainable growth in those markets.
The company reported 3Q13 loss to $2.6 million or breakeven on per share basis, compared to loss of $3 million, a year ago. The company forecasted 4Q13 revenue of $690 to $740 million, significantly lower than consensus estimates for $723.7 million. Moreover the company anticipates reporting a breakeven or even a profit of $0.02 per share in 4Q13. The analysts had expected earnings of $0.06 per share.
Groupon also attributed revenue pressure to introduction of ‘promotions’ tab in Google Inc. (NASDAQ:GOOG)’s Gmail service that resulted in fall in open rates of Groupon’s daily emails as the ‘promotions’ tab filters promotional mails and displays them separately from the user’s primary email inbox. Moreover its deals offering also faces competition from Google Offers and Amazon.com, Inc. (NASDAQ:AMZN)’s Amazon Local.