Groupon Posts Lower-Than-Expected Earnings

The online coupon company's stock drops 6% as both its sales and profit came in below Wall Street estimates.
Katie Kuehner-HebertAugust 7, 2015

Under pressure from  e-commerce competitors Amazon and eBay, Groupon on Friday posted lower-than-expected second-quarter results and forecast numbers for the third quarter below Wall Street estimates.

The Chicago company’s revenue rose 3.1%, to $738.4 million, but analysts were expecting $740.2 million, according to Reuters. Net income was $109.1 million in the quarter, compared with a year-ago loss of $22.9 million, helped by a gain on the sale of the 46% stake in Groupon’s South Korean business.

Excluding items, the company earned 2 cents per share, missing analysts’ estimates of 3 cents.

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For the third quarter, Groupon forecast revenue would fall to between $700 million and $750 million, from $757.1 million a year earlier. It expects to break even or earn up to 2 cents a share on an adjusted basis. Analysts on average were expecting a profit of 3 cents per share and revenue of $755.9 million, according to Thomson Reuters I/B/E/S.

On the heels of the earnings report, Groupon stock was trading at around $4.40, down nearly 6%.

“The guidance says that the cost of growth is getting more expensive, so I think that the company still faces pretty significant challenges in their core business,” ITG Investment Research analyst Steve Weinstein told Reuters.

Groupon, which once dominated the fast-growing online coupons arena, has been struggling to attract customers and rev up sales due to stiff competition from smaller companies and online giants such as Amazon and eBay, Reuters said. The company, which has started selling products online, is focusing on transforming itself to an online marketplace from a firm that only sells deals and coupons.

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