Home Groupon’s First Earnings Call Missed the Mark, But It May Not Matter

Groupon’s First Earnings Call Missed the Mark, But It May Not Matter

Today in its quarterly earnings call, Groupon reported that it did not meet fourth quarter expectations. The company posted a $43 million loss, or $0.08 cents per share.

Despite the loss, Groupon’s fourth quarter 2011 revenue grew 194% to $506.5 million, up from $172.2 million in the fourth quarter of 2010. This brings everyone back to the same question: Is the daily deals model a real, legitimate business, or is it just a trend? Only the numbers will tell.

On the earnings call, CEO Andrew Mason mentioned the company’s expansion into Silicon Valley. In regards to the losses, Mason pointed out that Groupon is “still in the early days” of personalized commerce, an area it is rapidly expanding into. Earlier this week, it acquired Adku, a start-up focused on big data for ecommerce. Last month it acquired personalization service Mertado, which is focused on providing a better social shopping experience. With more personalized data comes two things: Greater responsibility surrounding privacy, and additional opportunities for Groupon to know its users.

On the earnings call, Groupon reported that the Grouponicus holiday promotion, which hit 40 North American markets, helped boost fourth quarter 2011 earnings. CFO Jason Childs said that because Grouponicus was such a success, Groupon is considering “occasional themed promotions throughout the year.”

Groupon also mentioned why it had a 1600% effective tax rate. Apparently, this was a result of building its international headquarters in Switzerland and profits in overseas countries. It expects that to to eventually drop into the “low 30s.” Keep in mind that the U.S. corporate tax rate is 35%.

The company says that it will be spending big on technology hires, referencing the new Silicon Valley facility but also mentioning an “initiative we’ve yet to announce.” Groupon says it is not planning on acquisition-related expenses in the near future.

And what of high marketing costs, the area that concerned many? Marketing spent as a percentage of revenue was only 31% in the past quarter versus more than 100% a year before. Will it shrink even further? “Whether it will get down to the 5-10% you see at Amazons or Netflix…that’s going to take a little while,” says Groupon’s CFO Jason Childs.

When Groupon went public last November, it raised $700 million in its IPO. That number is now up to $1.1 billion.

For the first quarter 2012, Groupon expects revenues between $510 and $550 million, which is 73%-86% more than first quarter 2011. Will Groupon meet its goals next quarter? Either way, it’ll be interesting to watch.

About ReadWrite’s Editorial Process

The ReadWrite Editorial policy involves closely monitoring the tech industry for major developments, new product launches, AI breakthroughs, video game releases and other newsworthy events. Editors assign relevant stories to staff writers or freelance contributors with expertise in each particular topic area. Before publication, articles go through a rigorous round of editing for accuracy, clarity, and to ensure adherence to ReadWrite's style guidelines.

Get the biggest tech headlines of the day delivered to your inbox

    By signing up, you agree to our Terms and Privacy Policy. Unsubscribe anytime.

    Tech News

    Explore the latest in tech with our Tech News. We cut through the noise for concise, relevant updates, keeping you informed about the rapidly evolving tech landscape with curated content that separates signal from noise.

    In-Depth Tech Stories

    Explore tech impact in In-Depth Stories. Narrative data journalism offers comprehensive analyses, revealing stories behind data. Understand industry trends for a deeper perspective on tech's intricate relationships with society.

    Expert Reviews

    Empower decisions with Expert Reviews, merging industry expertise and insightful analysis. Delve into tech intricacies, get the best deals, and stay ahead with our trustworthy guide to navigating the ever-changing tech market.