Groupon Shocks Shareholders with Q4 Loss

Daily deal site Groupon Inc (NASDAQ:GRPN) shocked the markets by reporting a loss in its fourth quarter that was not anticipated by analysts. Groupon’s shares shaved off 16 percent in late trading after the announcement.

The loss was 2 cents a share, excluding certain costs, compared to a loss of 53 cents in the same period a year ago. Analysts had expected a profit of 3 cents a share on revenues of $472.6 million. Actual revenue came in at $506.5 million, up from $172.2 million in the previous year.

One of the major causes for the loss was a $34.8 million tax bill that arose after the company set up a new international headquarters in Switzerland. According to CFO Jason Child, the taxes related to overseas operations will decline over time. Analysts view Groupon’s effective tax rate as “extraordinarily high”.

Marketing expenses were $156.5 million compared to $200.9 million last year, with the company looking to further reduce this expense over time. A new data center was commissioned to power its operations – that resulted in capital spending rising to a record $14 million. Manpower expense is likely to go up as the company is “still far under-indexed in terms of our technology headcount” and may beef up recruitment of engineering staff.

Revenues grew at a fast clip – though North America doubled to $188.5 million from $88.4 million, overseas revenues more than tripled from $83.9 million to $318 million. The company forecasts revenues for the first quarter at $510 million to $550 million, whereas analysts had expected about $500.8 million. Income from operations is forecast at $15 million to $35 million.

Here’s how shares of GRPN are trading now:

Groupon Inc (NASDAQ:GRPN): GRPN shares recently traded at $21.82, down $2.76, or 11.23%. They have traded in a 52-week range of $14.85 to $31.14. Volume today was 3,510,653 shares versus a 3-month average volume of 2,293,400 shares. The company’s trailing earnings are $-2.17 per share.

To contact the reporter on this story: Damien Hoffman at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com