Shares of Groupon Inc. (GRPN) slipped 25 percent in after-hours trade on Wednesday, after it reported a fourth-quarter loss that widened from a year ago despite a 30 percent growth in revenues. The bottom line was hurt mainly by a significant decline in margins and a hefty charge linked to a cost method investment in China. The company also detailed a weak revenue guidance for the first quarter.
Chicago, Illinois-based Groupon's fourth-quarter loss widened to $81.1 million or $0.12 per share from $65.4 million or $0.12 per share last year. Results for the quarter included non-operating loss of $50.6 million related to the impairment of a cost method investment in China.
The daily deal website's revenue for the quarter increased 30 percent to $638.3 million from $492.2 million last year. Excluding foreign exchange impact, revenue growth was 31 percent.
Analysts polled by Thomson Reuters expected earnings of $0.03 per share, on revenues of $638.4 million for the quarter. Analysts' estimates typically exclude special items.
Groupon said revenue growth was driven mainly by higher direct revenue, as contribution from Groupon Goods, an e-commerce site started in 2011, increased while demand for its daily discount deals softened. However, the problem with Groupon Goods is that it has lower profit margins.
Meanwhile, Groupon's top-line growth continues to drop, as previous quarter growth was 32 percent, 45 percent in second quarter, 89 percent in first quarter, and 186 percent growth in fourth quarter last year. International revenues continued to be impacted by weakness in Europe and Asia. Groupon, which has a business model that is easy to imitate, has also been affected by the hundreds of imitators, such as LivingSocial and Amazon Local.
Gross margin, or percentage of sales left after deducting sales cost, dipped to 56 percent from 80 percent last year.
Looking forward to the first quarter, Groupon expects revenues of $560 million to $610 million. Analysts currently estimate revenues of $650.29 million.
GRPN closed Wednesday's regular trade at $5.98, up 7.79%, on the Nasdaq. The stock however, lost $1.46 or 24.45% in after hours trade.
by RTT Staff Writer
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