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Groupon Inc (GRPN) Swings And Misses, But Investors Happy Anyway

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Groupon Inc (NASDAQ:GRPN) posted worse than expected revenue results and guidance last night, but investors are apparently excited about other things. The daily deals company beat earnings expectations by a penny and announced what some see as a key acquisition. Sterne Agee analysts remain Buy-rated on the company with a $12 per share price target.

Groupon Inc (GRPN) Swings And Misses, But Investors Happy Anyway

Shares of Groupon rose more than 3% in premarket trading.

Groupon misses expectations

Sterne Agee analysts Arvind Bhatia and Brett Strauser say expectations for Groupon Inc (NASDAQ:GRPN) were already low to begin with. They report that Goods billings was the main reason the company missed their estimates.

Groupon’s reported billings were $1.34 billion, while its revenue was $595.1 million. CSOI was $39.2 million. Those numbers compare to consensus of $1.39 billion in billings, $614.5 million in revenue and $41.6 million in CSOI. Sterne Agee analysts had been estimating $1.35 billion in billings, $600 million in revenue and $32.6 million in CSOI.

Problems with Groupon’s billings

Groupon Inc (NASDAQ:GRPN) reported a 20% year over year increase in North American billings, which was below Sterne Agee’s estimate of 23% and compared to the 30% increase in the second quarter of the year. International billings rose 2% year over year, edging out Sterne Agee’s estimate of 1%. Within international billings, Europe, the Middle East and Africa increased 12% year over year while the rest of the world decreased 13% year over year.

Groupon’s North American revenue increased 24%, compared to Sterne Agee’s estimate of 27%. International revenue fell 15%, compared to their estimate of a decline of 17%. North American CSOI was $25.2 million, compared to their estimate of $27.8 million. International CSOI was $14 million, which came out significantly ahead of their estimate of $4.9 million. North American local billings were $403 million, which was slightly ahead of their $400 million estimate.

Groupon’s weak guidance

Groupon Inc (NASDAQ:GRPN) also guided below expectations. The company expects to see fourth quarter revenue of between $690 million and $740 million and non-GAAP operating income of between $40 million and $60 million. Consensus revenue expectations were $725 million, although Sterne Agee had only been forecasting $676 million for the fourth quarter.

Groupon acquires Ticket Monster

One thing which may have helped buoy Groupon Inc (NASDAQ:GRPN)’s results was its acquisition of Ticket Monster, a Korean ecommerce company. The deal is worth $260 million, including $100 million or more in cash and the rest in stock. Ticket Monster has over $800 million in annual billings. Groupon expects the deal to close in the first half of the year.

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