Groupon (GRPN) Swings to Q1 Profit of 2c/Share, Guidance Looks Solid

May 14, 2012 4:44 PM EDT
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Price: $45.70 --0%

EPS Growth %: +115.3%

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Traders in Groupon (Nasdaq: GRPN) can barely hit the "Buy" button fast enough Monday afternoon following strong first-quarter results and second-quarter sales guidance which seems to be at the upper end of the Street consensus. After adding some 18 percent to the company's value during the intraday session, Groupon shares are now up another 12 or so percent to over $13.20.

The company posted an 89 percent surge in sales from $295.5 million in the same quarter last year to $559.3 million. Analysts on the Street were looking for sales of $530.6 million. Gross billings, which is based on the gross amounts collected from customers for Groupons sold, excluding any applicable taxes and net of estimated refunds, more than doubled to $1.35 billion in the quarter.

North American sales jumped 75 percent partly amid "technology innovations such as deal personalization that Groupon plans to introduce to the majority of its international operations by the end of this year." Also in the region, about 30 percent of transactions were completed on mobile devices, compared with 25 percent in December 2011. This growth created momentum for Groupon Now!, which recently surpassed 1.5 million Groupons sold.

While operating income came in at $39.64 million in the first quarter of 2012, the net loss totaled $11.7 million. When adjusting for certain one-time items, Groupon reported a quarterly non-GAAP gain of $16.26 million, much better than a loss of $127.62 million issued in the year-ago quarter. Adjusted earnings per share totaled 2 cents, up from a loss of 41 cents per share last year and better than the 1 cent expected by the Street.

Groupon's CEO Andrew Mason said, "We are pleased to report a record quarter that demonstrates our progress in unlocking the opportunity in local commerce for merchants and customers worldwide."

Operating cash flow ramped a very sharp 367 percent to $83.7 million. Free cash flow totaled $70.6 million during the quarter.

Groupon is looking for second-quarter revenue in the range of $550-$590 million, which compares to the analyst consensus estimate of $558.74 million. Net income is expected to be $25-$45 million, versus a loss from operations of $101 million in the second quarter of 2011.

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