Groupon Earnings Report Delights Investors

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Groupon Inc. (NASDAQ: GRPN) reported first quarter 2013 earnings after markets closed today. For the quarter, the daily deals company posted adjusted diluted earnings per share (EPS) of $0.03 on revenues of $601.4 million. In the same period a year ago, the company reported an net EPS loss of $0.02 on revenues of $559.28 million. First-quarter results compare to the Thomson Reuters consensus estimates for EPS of $0.03 and $588.92 million in revenues.

On a GAAP basis, Groupon posted an EPS loss of $0.01 on the effect of stock-based compensation and acquisition costs totaling $20.9 million net of tax.

The company’s first quarter gross billings totaled $1.41 billion, up 4% year-over-year for the first quarter. Gross billings are the dollar value of sales less taxes and estimated refunds. Gross billings rose 8.3% year-over-year in the quarter, excluding foreign exchange effects. An SEC inquiry into the methods Groupon uses to estimate future refunds diminishes the value of this metric in the eyes of investors and analysts.

The company’s CEO said:

We are encouraged by our results, as our local revenues accelerated and our margins improved over the prior quarter. We had record mobile performance as 45% of our North American transactions came from mobile in March, and more than 7 million people downloaded our apps in the quarter.

The company said that it expects second quarter revenues of $575 to $625 million and operating income will range from $20 to $40 million, not including stock-based compensation. The consensus estimate for the quarter calls for EPS of $0.05 on revenues of $616.14 million.

Groupon’s first quarter performance handily beats its fourth quarter showing, especially regarding its outlook. The consensus EPS estimate looks high, based on this quarter’s non-GAAP EPS of $0.03 based on $51.2 million in operating income.

For the full year Groupon reaffirmed its guidance for GAAP operating income of more than $100 million. Full year 2012 operating income totaled $98.7 million.

The company’s shares are up 11.5% in after-hours trading today, at $6.22. The current 52-week range is $2.60 to $14.93. The consensus target price for the shares was around $5.60 before today’s report.

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