Groupon investors were expecting a better deal than the surprise loss the firm delivered on Wednesday.
The online deals site, reporting for the first time as a public company, said its fourth-quarter revenue nearly tripled, but it lost money and its shares fell sharply after hours.
Groupon Inc, which went public in November last year, makes money by taking a cut from the online deals it offers on a variety of goods and services, such as restaurant meals, manicures and weekend getaways. Investors are watching whether this business model is sustainable and leads to growth over the long term — and whether the company can not only grow its customer base, but make more from each subscriber.
Groupon’s net loss totaled US$42.7 million, or US$0.08 per share, last quarter. A year earlier, as a private firm, it booked a larger loss of US$378.6 million, or US$1.08 per share.
The company said its adjusted loss was US$0.02 per share in the latest quarter. On this basis, analysts were expecting a profit of US$0.03 per share, according to FactSet.
Groupon said an unusually high international tax rate hurt the quarter’s adjusted results.
Fourth-quarter revenue was US$506.5 million, nearly triple the US$172.2 million it reported a year earlier. Analysts, on average, had expected lower revenue US$473.1 million, according to FactSet.
For the current quarter Groupon expects revenue of US$510 million to US$550 million. Analysts are forecasting US$501 million.
CEO Andrew Mason called last year a “phenomenal growth year” for Groupon, but he stressed that the company wanted to keep expanding and that would require continuing investment in technology.
“While Groupon is the clear market leader in online local commerce, we estimate that we still participate in less than 1 percent of total local transactions,” Mason said.
Groupon chief financial officer Jason Child predicted that the company would be profitable in all regions of operation “in the next year or two.” He said there were plans to roll the service out soon in more parts of Britain and the US.
Groupon had 33 million active customers at the end of the quarter, nearly four times as many as a year earlier. It defines active customers as those who have purchased a Groupon in the previous 12 months.
Customers spent US$1.25 billion on all the Groupons the company sold in the quarter. That “gross billings” figure doesn’t include taxes or account for the money the company paid to merchants.
Chicago-based Groupon’s stock tumbled US$3.59, or 14.6 percent, to US$20.99 in after-hours trading. The stock, which closed at US$24.58 on Wednesday, has traded in the range of US$14.85 to US$31.14 since pricing at US$20 ahead of its initial public offering on Nov. 4.