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Groupon After IPO

Posted on Tuesday, Feb 14th 2012

According to Daily Deal Media, the daily deals market has become volatile. The report reveals that worldwide, nearly 800 daily deal sites shut down in the second half of 2011. The total included 1,348 sites in Asia alone. But there was growth in the European and Latin American markets, where there were 235 and 324 new deals sites, respectively. Analysts believe that the shutting down of sites is more an indicator of bigger players like Groupon taking out competition and not of a shrinking market opportunity.

Groupon’s Financials
Groupon, the daily deals giant in the U.S., had (NASDAQ:GRPN) Q4 revenues that grew 195% over the year and 18% over the quarter to $506 million to end the year with revenues of $1.63 billion. The Street was expecting revenues of $473.1 million. The company’s revenues may be growing rapidly, but their rising costs are a matter of concern. During the past year, increased sales and marketing expenses drove SG&A expenses to 50% of their net revenues. During the quarter, they reported a net loss of $0.08 per share, compared with a loss of $1.08 per share a year ago. On an adjusted basis, they reported a loss of $0.02 per share compared with analyst projections of a profit of $0.03 per share. They ended the quarter with 33 million active users worldwide, reporting growth of 20% over the year.

For the current quarter, they are projecting revenues of $510 million-$550 million. The market was looking for revenues of $501 million.

Groupon’s Acquisitions
Apart from marketing, Groupon has also been investing in acquiring technology start-ups to improve the online shopping experience for their customers. Last week, they acquired Adku, a San Francisco–based “big data” startup, for an estimated $10 million. Adku’s services have been deployed on sites like Amazon and eBay to offer consumers additional buying suggestions based on consumer location and buying trends.

Last month, Groupon had acquired social shopping platform Mertado. Mertado is known for their Mertado TV, which uses the Facebook platform to integrate their home and kitchen products with programming content developed by developers in the lifestyle segment, such as the Food Network and Better TV.

For talent acquisition, Groupon acquired Silicon Valley startup Campfire Labs. Campfire Labs was developing a social messaging and collaboration platform aimed at understanding the few people in the group who were more relevant. Their existing group messaging platform offered Web-based chat tools along with the ability to share calendars and media.

Groupon’s International Expansion
Groupon has also been testing international markets. Last year, they expanded into India through the acquisition of and recently rebranded to Crazeal. Currently in beta mode, will launch in 11 cities in the country. Groupon now has a presence in more than 150 markets in North America and 100 markets in other continents, including, Europe, Asia, and South America.

Groupon’s stock is trading at $19.45 with a market capitalization of $12.4 billion. The stock has slid significantly from the high of $31.14 it reached shortly after listing.

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