Groupon Inc (NASDAQ:GRPN) was one of the fastest growing companies ever in its early days, and created an entirely new business category. Just three years after its launch, the company reached $2 billion annual revenue. However, its growth has slowed to a single-digit rate for the past several quarters. That prompted the Chicago-based company to change its leadership team and business plan. Groupon has been taking massive steps to capitalize on mobile, lower its dependence on email channel, and boost its international operations.

Groupon

Groupon working hard to re-accelerate its growth

Barrington Research analyst Jeff Houston said in a research note that Groupon Inc (NASDAQ:GRPN) is well-positioned to reaccelerate its growth and profitability. It has a market share advantage, a recognizable brand and high free cash flow generation. Barrington Research has an Outperform rating on the stock with $14 price target. The stock currently trades at 1.3x 2015 EV/Rev, which is much lower than the 3.5x average of slower-growth Internet group.

Groupon

Groupon Inc (NASDAQ:GRPN) reported better-than-expected fourth quarter results on February 20. Its revenues jumped 20% YoY to $768.4 million, beating the Wall Street consensus of $719.5 million. Groupon’s adjusted EPS came at 4 cents, compared to the Wall Street estimates of 2 cents. The number of active customers rose 9% YoY to 44.9 million, while the active deals increased from 65,000 in Q3 to 80,000 in Q4. Gross billings inched up 5% to $1.59 billion. However, the company’s current quarter earnings guidance missed the consensus estimates. Groupon projects net Q1 loss of 2-4 cents, while analysts were expecting a net profit of 6 cents per share. Its revenue guidance of $710-$760 million, well above the Street projections of $667.2 million.

Groupon’s local revenues hurt by a model shift

Barrington Research believes that Groupon Inc (NASDAQ:GRPN) will successfully transform from a flash-sale emailer to a popular mobile-commerce platform. The company’s four strategic pillars are mobile, local, pull, and One Playbook. About 50% of the company’s total transactions took place on mobile during the fourth quarter. However, its domestic local revenues skidded 3% due to shift to pull model. Local revenues were also hurt by a difficult YoY comparison when the company sacrificed take rates in favor of billings growth.

Groupon Inc (NASDAQ:GRPN) completed the $260 million acquisition of Ticket Monster on January 2. The company also closed the $42 million purchase of the apparel-flash site Ideeli on January 15. Barrington estimates these two deals to add about $50 million to Groupon’s annual revenue, and dilute its adjusted EBITDA by $20 million.

Groupon Inc (NASDAQ:GRPN) shares inched up 0.96% to $8.39 at 9:55 AM EST.