Groupon Headline Loss Trumps Revenue Beat (GRPN)

Groupon, Inc. (NASDAQ: GRPN) has just shown its first earnings report since it came public.  The online couponing site reported -$0.02 EPS on an increase of 194% in sales to $506.5 million in the fourth quarter 2011.  Thomson Reuters was at $0.03 EPS and $475.15 million.

An unfavorable impact from foreign exchange was $3.5 million in sales.  Gross billings (the first revenue counting) is the gross amounts collected from customers for Groupons sold and excludes taxes and net of estimated refunds… That rose by 201% to $1.25 billion in the fourth quarter.

The company “helped 250,000 local merchants across 47 countries grow their businesses while saving Groupon customers billions of dollars.”

Operating income was $15.0 million in the fourth quarter 2011, compared with a loss from operations of $336.1 million in the fourth quarter 2010.  This was the first positive quarter on operating income.  Fourth quarter 2011 operating results included losses of over $40 million principally from less mature markets within the international segment.

Operating cash flow increased 226% to $169.1 million for the quarter; Free cash flow rose 258% to $155.1 million for the quarter. Groupon also finished with $1.1 billion in cash and cash equivalents and no long-term debt.

Here is first quarter guidance: Revenue $510 million to $550 million; income from operations of $15 million to $35 million (includes approximately $35 million for stock-based compensation and acquisition-related expense).  Next quarter’s revenue target from Thomson Reuters is $500.89 million.

The headline loss is killing the stock initially.  After a near two-percent gain to $24.66, Groupon is down 12% at $21.70 in the after-hours session.

JON C. OGG