Groupon Sales Growth Anemic as Operating Income Slides

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Groupon Inc. (NASDAQ: GRPN) is not a company we consider as systemically important, but it is widely tracked by many investors and consumers. The online couponing social media company has reported earnings of $0.02 per share before options and other items and its sales were up by 5% to $595.1 million. Thomson Reuters was projection consensus estimates of $0.01 in earnings per share on sales of $615.7 million.

Gross billings were $1.34 billion for a gain of 10%. North America growth of 20% and EMEA growth of 12% was offset by a 13% decline in Rest of World.

North America revenue growth of 24% was offset by a 21% drop in EMEA and a 4% decline in the areas considered as the rest of world. Gross profit was $359.6 million in the third quarter versus $386.8 million a year ago.

The company pointed to strength in local businesses and said that mobile adoption continued to increase. It reached a record 9 million app downloads and is still looking to transform itself from its daily deal email roots to a full ecommerce marketplace. Groupon also announced that it has signed an agreement to acquire Ticket Monster as a ecommerce company in Korea.

What is going to be a concern here is that Groupon’s operating income was $13.8 million in the third quarter, and that is lower than the $25.4 million in the same period a year ago. Another issue is that the operating income was down by $13.6 million when compared to second quarter 2013.

Groupon shares closed down 5% at $9.50 and the stock is down another 8.8% to $8.45 in the after-hours reaction. Groupon’s shares have traded in a range of $2.60 to $12.76 in the last 52-weeks.