Groupon Inc Confident On Hitting Financial Goals

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

Groupon management sounded positive during the MIT conference organized recently, which convinced Deutsche Bank analyst Ross Sandler to maintain a Buy rating on the company’s stock. According to Sandler, the company looks determined to achieve its one- and three-year financial goals.

Groupon appears confident

Additionally, the analyst noted that Groupon is taking more interest in increasing the selections across its platform and growing search-related transactions in 2015.

Groupon revived itself in North America post challenges in the third quarter of fiscal year 2014, and management believes a similar situation could occur in the second quarter of 2015, if Groupon starts lap discounting. Additionally, the online marketplace is considering sharing the cost of order discounts with merchants, but the effect will be evident gradually, stated the analyst.

Sandler also noted that search-related transactions increased to 26% in the fourth quarter compared to 19% in 2013, and he expects the upward trend will continue in future quarters as well. Further, Sandler believes that those who use the search feature are likely to spend more, which is why an increase in search-based transactions would mean an incremental increase in average revenue per user.

Groupon did not release details regarding the sale of its subsidiary Ticket Monster, but executives mentioned that they were quite pleased with the ongoing process. Additionally, Sandler said that Goods profitability globally seems to be “stable to improving.”

Impressive performance, upbeat outlook

For the last quarter of fiscal 2014, the company posted revenue of $925.4 million compared to the consensus estimate of $908.2 million. Adjusted earnings per share came in at 6 cents, compared to the consensus estimate of 3 cents. Groupon has performed better than estimates over the past eight quarters and has never missed on the earnings estimate.

For 2015, Groupon expects its top line to surge 15% even when revenue growth is just expected to be somewhere between 4% and 11% in the first quarter of 2015. In the long run, the company is even more enthusiastic with revenue and adjusted EBITDA growth targets at over 20% and 25% by 2017.

On Wednesday, Groupon shares closed up 1.78%, while year to date, the stock is down by almost 3%.

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About the Author

Aman Jain
Aman is MBA (Finance) with an experience on both Marketing and Finance side. He has worked as a Risk Analyst for AIR Worldwide, and is currently leading VeRa FinServ, a Financial Research firm. Favorite pastimes include watching science fiction movies, reviewing tech gadgets, playing PC games and cricket. - Email him at [email protected]

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