Groupon beats estimates with 8% revenue growth to $601.4M, non-US sales continue to lag in Q1

Groupon.com Inc, world's largest online group-buying site which operates in India through its arm Groupon.co.in, saw global revenues rise 8 per cent to $601.4 million in the first quarter, led by faster growth in mobile users in the home market. Revenues for the first quarter beat analyst estimates, perking up its share price on Wednesday.

North America revenue growth of 42 per cent was offset by 18 per cent decline in the international segment on a year-over-year basis.

"We had record mobile performance as 45 per cent of our North American transactions came from mobile in March, and more than 7 million people downloaded our apps in the quarter," said Eric Lefkofsky, chairman and co-CEO of Groupon.

Gross billings, which reflect the total dollar value of customer purchases of goods and services, excluding any applicable taxes and net of estimated refunds, increased 4 per cent to $1.41 billion in Q1, compared with $1.35 billion in the first quarter of 2012. North America growth of 23 per cent was partly offset by 9 per cent decline in the international segment on a year-over-year basis.

Gross profit was $379 million in the first quarter of 2013, compared with $439.8 million in the year-ago period.

Operating income was $21.2 million compared with $39.6 million in the first quarter of 2012. Operating income, excluding stock compensation and acquisition-related costs, was $51.2 million in the first quarter of 2013, compared with $67.6 million in the year-ago period.

Other highlights

Global units: Consolidated units, defined as vouchers and products ordered before cancellations and refunds, increased 4 per cent year over year to 45 million. North America units increased 37 per cent while international units decreased 18 per cent.

Active deals: As of March 31, 2013, the number of active deals in North America increased to nearly 40,000, compared with nearly 37,000 at the end of the fourth quarter of 2012.

Active customers: Active customers, or customers that have purchased a Groupon within the last 12 months, grew 13 per cent year over year, to 41.7 million as of March 31, 2013, comprising 18.2 million in North America and 23.5 million internationally. This marks a sequential dip in non-US customers.

Headcount: The firm has been pruning its headcount over the last few quarters and Q1 was the third straight sequential quarter when its total headcount shrank. The cuts are happening in non-US operations.

Average billing per active customer: While average billing per customer in the home market has been stable in a narrow range of around $150, it has seen a sharp decline for international customers from $197 in Q1 2012 to $129 in the last quarter. This has also pulled down the overall average billing per customer.

Mobile: In March 2013, 45 per cent of North American transactions were completed on mobile devices, compared with nearly 30 per cent in March 2012.

Marketplace: The rollout of Groupon's marketplace continued to gain momentum, as email accounted for less than 45 per cent of North American transactions in the first quarter of 2013.

Outlook

Groupon anticipates incremental investments of between $15 million and $30 million in customer incentives and marketing in the second quarter of 2013. Revenue for the second quarter ending June 2013, is expected to be between $575 million and $625 million, and operating income, excluding stock compensation and acquisition-related expenses, is expected to be between $20 million and $40 million. The company also reaffirmed its guidance that full year 2013 GAAP operating income will exceed $100 million.