(Adds details from conference call, updates share movement)
By Sruthi Ramakrishnan
Feb 20 Groupon Inc forecast a surprise
quarterly loss as it spends more to advertise its online
marketplace, which is expected to make up for its lagging daily
deals business, and its shares fell more than 13 percent in
The stock had briefly risen more than 18 percent in extended
trading after the company reported better-than-expected
fourth-quarter results, helped by strong demand in the holiday
season for its business that sells discounted products.
Groupon, which competes with Amazon.com, eBay
and Google, has been building an online
marketplace, called Pull, that lets people search for and buy
deals in their area.
This is a big change from Groupon's original business, which
sends a daily email to subscribers offering one or two deals
which have to be bought the same day but can be redeemed later.
"The majority of our customers in North America still have
no idea they can come to Groupon and search among our 80,000
deals in real time," Chief Executive Eric Lefkofsky said on a
conference call with analysts.
However the shift to the Pull marketplace means that
customers can delay their purchases rather than make them on the
same day as was the norm in its daily deals business. These
delays in purchases are putting pressure on the growth in the
overall local deals business, Lefkofsky said.
"We believe that this trend is likely to be with us for a
few more quarters until the positive effects from Pull outweigh
the short-term pressure this transition creates with our local
Revenue from its local deals business accounted for about 37
percent of revenue in the fourth quarter ended Dec. 31. Only
Groupon Goods, the company's discounted product sales business,
Groupon will spend $25 million exclusively on marketing Pull
in the first quarter, Chief Financial Officer Jason Child told
Reuters. In comparison, marketing costs fell 7 percent to $56.5
million in the fourth quarter.
The company will also spend $20 million to integrate its
recent acquisitions - Ticket Monster and Ideeli, Child said.
Groupon bought rival LivingSocial Inc's South Korean unit,
Ticket Monster, for $260 million in November and Ideeli Inc for
about $43 million last month.
Groupon forecast an adjusted loss of 2-4 cents per share, on
revenue of $710-$760 million for the quarter ending March.
Analysts on average were expecting a profit of 6 cents per
share on revenue of $668.7 million, according to Thomson Reuters
The company's net loss slightly widened to $81.2 million, in
the fourth quarter, from $81.1 million, a year earlier.
On a per share basis, the loss was 12 cents per share, flat
with a year earlier. Excluding items, it earned 4 cents per
share in the latest quarter.
Revenue rose 20.4 percent to $768.4 million. Gross billings
- a key metric that reflects the gross amount collected from
customers - increased 5 percent to $1.6 billion.
Analysts on average were expecting earnings of 2 cents per
share on revenue of $718 million.
Groupon's shares were trading down 10.3 percent at $9.21 in
trading after the bell. They closed at $10.279 on the Nasdaq on
(Editing by Savio D'Souza)