Groupon 2Q beat profit estimates; sales disappoint

Groupon 2nd-quarter profit beats estimates, sales disappoint on currency moves

Associated Press
Weak European economy hurts Groupon in 2Q
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FILE - In this Sept. 22, 2011 file photo, the Groupon logo etched in glass is shown in the lobby of the online coupon company's Chicago offices. Groupon Inc., said Monday, Aug. 13, 2012, that its second-quarter earnings beat Wall Street's profit estimates, but it underwhelmed analysts with sales growth hurt by unfavorable currency movements. (AP Photo/Charles Rex Arbogast, File)

CHICAGO (AP) -- Online deals website Groupon Inc. said Monday that its second-quarter earnings beat Wall Street's profit estimates, but it underwhelmed analysts with sales growth hurt by unfavorable currency movements.

Net income in the three months to June 30 came to $28.4 million, or 4 cents per share. The earnings reversed a net loss of $107.4 million a year ago.

Excluding the cost of paying executives with stock and a gain on reorganizing a Chinese joint venture, adjusted earnings came to 4 cents per share, beating the 3 cents expected by analysts polled by FactSet.

Revenue rose 45 percent to $568.3 million, which was below the $574.8 million expected by analysts. Groupon says its revenue was $32.4 million lower because of a weaker euro and U.K. pound. That means sales made in Europe got converted back into fewer U.S. dollars.

Shares dropped $1.06, or 14 percent, to $6.49 in after-hours trading following the earnings release. That's down 68 percent from its initial public offering price of $20 per share in November.

Groupon improved profitability by reducing the cost of acquiring customers by 43 percent, while increasing the number of active customers by 65 percent from a year ago to 38 million.

"We just got more efficient on marketing," Chief Financial Officer Jason Child said in an interview. "We dropped those efficiencies to the bottom line."

For the quarter through September, Groupon said it forecast revenue of $580 million to $620 million. The midpoint was below the $605.5 million expected by analysts.

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