Groupon Inc (NASDAQ:GRPN) will report its second-quarter results after the market closes on August 5, and Sterne Agee analysts Arvind Bhatia and Brett Strauser, expect numbers to be in-line with the estimates. According to analysts, investors will be primarily concerned with three key metrics: revenue growth in Local, improvement in Goods gross margins and, progress in international operations.Groupon

Pull Marketplace net positive for Groupon

Groupon is undergoing a shift in its business model from Push to Pull, which indicates that the company is working to hold on to the users “to check the company’s website for its worldwide Marketplace of 200,000 active deals (and growing) and not just when prompted via an email or a push notification within the Groupon app.”

In the first-quarter of 2014, Pull accounted for 9% of transactions compared to 8% and 6% in fourth-quarter and third-quarter of 2013, respectively. According to the analysts, Pull customers spend 50% more than average customers, and have a longer “life-time-value” compared to the average customers coming via Pull. Analysts believe that an active Marketplace postpones the purchasing to a later date, when a user wishes to use the Groupon, this result in “delayed billings and lowered near-term top-line growth.” However, in the long-term the Pull Marketplace is expected to be net positive for Groupon, but for short-term it has resulted in some headwinds.

Analysts ‘tweak’ estimates

Analysts expect the revenue to come in at $750 million compared to the consensus estimate of $762 million and Groupon guidance of $725 million to $775 million. The consensus estimate for EBITDA is for $58 million compared to Sterne Agee estimate of $56 million and guidance of $45 million to $65 million.

For the second-quarter, analysts expect revenue to gain 23% year over year compared to 26% in the first quarter. For North America, revenues are expected to swell by 14% year over year while international revenue is projected to increase by 39% year over year.

For the full year, analysts estimate EBITDA to gain 5% year over year compared to over 10% last year. Analysts are “tweaking” their 2014 and 2015E EBITDA estimate from $300.6 million and $410.2 million to $300.7 million and $410.1 million respectively.

Sterne Agee analysts have a Buy rating on Groupon with a price target of $12, and recommend the stock for long-term investors owing to a massive addressable market, potential for turnaround and impressive valuation.