A cut in spending on marketing helped Groupon (NASDAQ:GRPN) post its first-ever quarterly profit and beat earnings estimates for the first quarter of the year. The daily deals company said it even added users at a quicker pace despite the cut in spending.
Groupon said it decreased marketing spend by 25 percent in the first three months of the year compared with the last quarter of 2011, while the number of new customers remained the same quarter-over-quarter. However, the number of repeat purchasers grew, as the company ended the quarter with 36.9 million active customers, an increase of 140 percent year-over-year. The company served more than 100,000 unique merchants in the quarter, with more than 50 percent of offers being made for merchants who had previously run on Groupon.
The company also expanded internationally, generating 57 percent of its revenue outside the U.S. in the first quarter. Almost 30 percent of Groupon’s transactions in North America were completed on mobile phones in April, up from 25 percent four months ago.
First-quarter pro-forma net income, which excludes option expenses, was 2 cents per share, versus a net loss of 41 cents a share, a year earlier. Revenue was $559.3 million, compared with $295.5 million in the first quarter 2011. The company was expected to make 1 cent per share on net revenue of $531 million.
“We are pleased to report a record quarter that demonstrates our progress in unlocking the opportunity in local commerce for merchants and customers worldwide,” chief executive Andrew Mason said in a statement.
Revenue for the second quarter 2012 is expected to be between $550 million and $590 million, an increase of between 40 percent and 50 percent compared with the second quarter 2011. Wall Street estimates are toward the conservative end of that range, with average forecasts pegging it at $558.7 million.
The company is trying to rebuild investor confidence after shares dropped more than 40 percent since its November initial public offering. In February, Groupon reported fourth-quarter operating income of $15 million, but later reversed it into an operating loss of the same amount. It said there had been a “material weakness” in its financial controls.
The stock of the world’s largest daily deals company rose almost 13 percent, or $1.52, to be at $13.25 in after-hours trading after having gained more than 18 percent in regular trading.