Groupon Inc (GRPN) Q4 Earnings Preview

Groupon earnings
By GrouponRUS (Own work) [CC BY-SA 4.0], via Wikimedia Commons

Groupon Inc (NASDAQ:GRPN) will report its fiscal fourth quarter results on February 20 at 5:00 pm EST. Shares of the local e-commerce company gained 1.20% in pre-market trading Thursday to $10.14 despite expectations of a weak quarter. Analysts polled by Thomson Reuters expect Groupon’s Q4 revenues to jump 12.5% YoY to $718 million. Wall Street forecasts the company to earn 2 cents a share in profits, compared to a loss of 1 cent in the same period last year. For the current quarter (Q1, 2014), analysts expect $669 million in revenues and 6 cents in EPS.

Analysts expect a weak Q4 from Groupon

Groupon Inc (NASDAQ:GRPN) forecasts its fourth quarter earnings of 0-2 cents on revenues between $690-$740 million. Over the past four quarters, the daily deals site has exceeded Wall Street estimates only once. For the fourth quarter, Groupon forecasts strong holiday sales growth, and slow revenue growth in Europe, the Middle East and Africa (EMEA).

A shorter holiday season and weak retail returns should affect hamper Groupon Inc (NASDAQ:GRPN)’s fourth quarter earnings growth, affecting its goods division. And the Chicago-based company’s daily deals business may decline by 5% QoQ. Morgan Stanley analysts recently said in a research note that they anticipate local deals growth to increase from 13% in Q3 to 17% in Q4. However, the research firm slashed its total billings growth estimate in North America from 21% to 15%. Moreover, Morgan Stanley was previously expecting Groupon’s goods business to jump 23% in Q4, but the analysts have lowered the estimate to just 10% growth.

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Groupon may face questions about Holden’s departure

Groupon Inc (NASDAQ:GRPN) recently acquired Ticket Monster, a Korean e-commerce company, for $260 million. It has also acquired Ideeli for $43 million. Investors would be watching closely for updated outlook after the two acquisitions. The company may also face questions about the recent departure of its product management head Jeff Holden, which sent the stock lower by more than 9%.

Groupon Inc (NASDAQ:GRPN) has a solid mobile penetration. The company said that more than 9 million users downloaded its mobile app in the third quarter alone.