Groupon shares fall in extended trading after earnings miss
Daily deals site exceeds revenue forecasts, but falls short on earnings
Shares of Groupon (NASDAQ: GRPN) fell more than 16% in extended trading Wednesday after the daily deals site reported a surprising fourth-quarter loss, its first earnings results since going public in early November.
After closing Wednesday's regular trading session up 1.6% to 24.58, Groupon's stock plunged as much as 4.05 to 20.53 after hours.
Should Thursday's trading follow suit, Groupon will have lost most of the recent "Facebook bounce" that has pushed up shares over the past week above the $20 offer price of the November 4 IPO.
While revenue nearly tripled to $506.5 million in the fourth quarter from $172.2 million in the year-ago period, Groupon reported a net loss of $42.7 million, or 8 cents a share, compared to a net loss of $378.6 million, or $1.08 a share, in the fourth quarter of 2010. On an adjusted basis, net loss for Q4 was $9.8 million, or 2 cents a share.
Average analyst estimates called for a net profit of 3 cents a share on revenue of $473 million.
The 194% growth in revenue from last year's quarter is impressive, but the sequential quarterly growth of 17.7% is considerably better than recent sequential quarterly growth rates of 9.6% from Q2 to Q3.
Groupon also reported operating income of $15.0 million in Q4, compared to a loss of $336.1 million in the year-ago quarter, which Groupon called the first quarter of operating profitability since the company began international operations in the second quarter of 2010.
In a prepared statement, CEO Andrew Mason said, "Groupon had a strong fourth quarter and we finished 2011 having helped 250,000 local merchants across 47 countries grow their businesses while saving Groupon customers billions of dollars. We will continue to invest in new services and tools that help our merchant partners be more successful and drive local commerce around the world."
Groupon followed Q4's revenue upside surprise with cautious guidance for Q1, predicting revenue between $510 million and $550 million -- an increase of between 73% and 86% compared with first quarter 2011 -- and income from operations between $15 million and $35 million, compared with a loss from operations of $117.1 million in first quarter 2011.
But the low end of the revenue guidance is barely above Q4 revenue. For a company that's staking its future (and story to investors) on growth, that's not impressive. Groupon will need to meet or exceed the high end and run an operating profit to impress investors next quarter.