Groupon Misses Q3, Stock Now $3.32

A little while ago Groupon announced Q3 earnings and missed analyst expectations. The stock is down in after hours trading and, remarkably, down more than 80% below its IPO price (a year ago).

Here are the top-line Groupon numbers:

  • Revenue: increased 32% year-over-year to $568.6 million in the third quarter 2012, compared with $430.2 million in the third quarter 2011
  • Gross billings: increased 5% year-over-year to $1.22 billion, compared with $1.16 billion in the third quarter 2011.
  • Operating cash flow: decreased 35% year-over-year to $42.1 million, compared with $64.4 million in the third quarter 2011.
  • Operating income: $25.4 million in the third quarter 2012

CEO Andrew Mason said that North American growth was offset by European market weakness.

Here are some additional numbers:

  • North American revenues grew 81% year-over-year
  • Groupon Goods reached an annual run rate of nearly $1.5 billion in global billings and nearly $500 million in revenues
  • Groupon surpassed the 200 million subscriber mark
  • Groupon had 39.5 million active customers, an increase of 37% YoY
  • Groupon featured more than 100,000 unique merchants, with 27,000 active deals
  • One third of North American transactions were completed on mobile devices

While many of these numbers aren’t bad they are below what financial analysts had expected. And some are characterizing Groupon’s Q3 as a “blown” quarter.

Groupon is currently (and quickly) trying to diversify its revenues into payments, POS tools for SMBs and online scheduling. My guess is that it will push further into SMB marketing services before it’s done.

Amazingly Groupon’s market capitalization is now $2.6 billion, which is about half of what Google offered for the company before it went public.

What do you think is going to happen to Groupon? Will the stock decline further? Will the company be able to execute its diversification plan?

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4 Responses to “Groupon Misses Q3, Stock Now $3.32”

  1. Marketing Biz: Foursquare Ratings, Universal Analytics & Death Of A Salesman says at

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    […] Groupon Misses Q3, Stock Now $3.32 […]

  3. Service says at

    So high growth and diversified Groupon is valued at about half that of the latest YP merger. Does that sound right to you? I’d still have my money on Groupon.

  4. Bob Misita says at

    Let me start be saying we run deals on behalf of clients (https://www.leadsnearby.com/daily-deal-coordination/) – so we are proponents of the concept.  That being said, the business model of the major deal sites (and Groupon in particular) are not built to capitalize on repeat usage by most small businesses.  Groupon has been the most difficult of the majors to work with – repeatedly ignoring requests to run deals and even switching out scheduled deals at the last minute.

    Deal sites are great for consumers but very difficult for most small businesses. 50% forced discount from retail and then 50% rev split – means most businesses are effectively discounting 75% off their retail fees.   Not many industries can absorb that.  

    Unless a business has a good loyalty program in place – coupled with potential first visit upsell capacity, the 75% haircut is too much even as a loss leader to attract new customers.   

  5. Service says at

    Coupons are just Groupon’s first act. Now that they have a brand, a tonne of cash in the bank, and a strong team of direct sales staff, they are now set for act 2. 

    I think we’re getting some hints as to what act 2 might contain with their recent aquisitions. Bookings, payments, and more. Soon coupons will only be a minor part of Groupons revenue streams.

  6. Greg Sterling says at

    I think part of the “Act 2” is motivated by a product plan and part is being compelled by a skeptical market.

  7. Loci 2012 Important Trends in Local – Ted Paff | Understanding Google Places & Local Search says at

    […] of ROI on marketing spend, Groupon has issues. The stock market knows it and its employees know it. However, there are some very smart people working at Groupon and they […]

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