Daily deals-provider Groupon Inc. announced its quarterly earnings as it posted revenues falling under expectations, highlighting issues in the European market.
During the third fiscal quarter Groupon’s GRPN, revenue from North America rose more than 80% year over year, while International revenue recorded only 3% growth. The company is also moving into new business areas, like selling merchandise directly to consumers as well as offering extended services to trades.
Consequently, overall revenue fell at $568.6 million, under the company’s previously predicted range of $580 million-to-$620 million.
Groupon’s stock which was down above 80% from their IPO price a year ago came down nearly 16% in after-hours trades to about $3.30 following the report. The stock closed the regular session up 4.3% at $3.92.
In a conference call with analysts, Groupon CEO Andrew Mason said the company followed a “different playbook” with its European business than it did in North America. He said the company focused on grabbing market share in Europe, “at the cost of investing in technology and innovation, and too often the satisfaction of our merchants and customers.”
According to mason the firm is working in the right direction, and its modifications are already showing positive results. He further added that growth in Europe since early September has been “strong,” with customer satisfaction scores rising by 20%. “This shows we are on the right track,” he said, adding that the enhancements were a key factor in the company’s strong forecast for the December quarter.
In the third fiscal quarter, Groupon posted a net loss of $2.98 million, or break-even on a per-share basis, in contrast to a net loss of $54.2 million, or 18 cents a share year over year.
Meanwhile company revenue surged 32% to $568.6 million, and gross billings surged 5% to $1.22 billion. Direct revenue, which comprise the Groupon Goods business under which the company sells items directly to consumers, rose to nearly $145 million, or about 26% of the overall revenue base.
In the meantime analysts had earnings predictions of 3 cents a share on revenue of $591 million, according to agreement forecasts from FactSet.