Groupon Inc (NASDAQ:GRPN) is scheduled to release its third quarter earnings report after closing bell on Thursday. Analysts and investors will want to see progress toward the previously stated goal of year over year billings growth in the double digits.

Groupon Inc Earnings Preview: Billings Growth In Focus

Groupon management sets goals

In a report dated Oct. 28, 2014, Sterne Agee analysts Arvind Bhatia and Brett Strauser remind investors of the three goals management set forth previously. First, they aim to reaccelerate growth in the company’s Local business and achieve double-digit revenue growth in North America.

Second, they want to improve the gross margin and operating efficiency of the Goods division and hit double digit gross margins by the fourth quarter of this year. And third, they want to see the international business stabilize and cut down on losses in the Rest of the World.

What to expect in Groupon’s earnings report

The Sterne Agee analysts want to see Groupon report $746 million in revenue, compared to the consensus estimate of $749 million and the company’s guidance of between $720 million and $770 million. They’re projecting adjusted EBITDA of $67 million, compared to the consensus estimate of $60 million and the company’s guidance of between $50 million and $70 million.

The analysts are looking for a 30% increase in billings, compared to the 29% increase in the previous quarter. They’re looking for a 49% growth rate in international billings and 11% growth in North America. In North America, they want to see a 7% increase in Local gross billings. In Goods and Travel, they want to see a 16% growth rate in each.

Groupon in a slow transition

The analysts point out that the transition in Groupon’s business model from Push to Pull has been slow. The company is basically “retraining” customers to check its website instead of waiting for emails or push notifications in the app. In the second quarter, they say the Pull strategy made up just 10% of transactions, only a slight increase from 9% in the previous quarter and 8% in the quarter before that.

They say that Pull customers, on average, spend 50% more and have a 50% greater lifetime value than the average Push customer. However, they add that the new strategy doesn’t have the urgency that the old strategy did because customers buy the deals closer to the time they want to use them rather than feeling rushed to buy them before they expire.

The Sterne Agee analysts say the result has been a delay in billings and also lower near-term top-line growth. However, they think the Pull Marketplace strategy will end up being a net positive, eventually.

Groupon recommended for long term

The Sterne Agee team said they like Groupon as a long term investment because the company has a large addressable market. Also they see potential for turnaround as the company’s execution improves.

They rate Groupon as a Buy with a $12 per share price target.