Groupon loses $42.7m in Q4, shares tumble

Groupon (GRPN) has posted a net loss of $42.7m for the last three months of 2011, disappointing Wall Street's expectation that the coupon-pushers would make a small profit. Groupon stocks closed the day at $24.58 but in after-hours trading stocks tumbled 15 per cent to $20.75 – suggesting that Groupon shareholders might want to brace themselves for a rocky ride when Thursday trading opens in New York.

Analysts had predicted that Groupon could turn a profit for the last quarter of 2011, after the company went public in November and promised to cut costs. Still, Groupon's 2011 Q4 loss is an improvement on the net loss of $378.6m it posted for the last three months of 2010.

Factors contributing to the loss were outlined by Chief Financial Officer Jason E Child in the SEC filing and included a higher-than-expected overseas tax bill thanks to Groupon's new operations abroad. The company said that if stock based compensation and acquisition charges were excluded, it would've have presented shareholders with a loss of just $9.8m.

Overall, revenue for Groupon increased significantly: the online voucher deals site pulled in $506.5m in the fourth quarter of 2011 compared to $172.2m in fourth quarter of 2010, an increase of 194 per cent.

Despite the missed target, Groupon is predicted to make a profit of between $15m and $35m in the first quarter of 2012.

In the investor conference call, CEO Andrew Mason said that Groupon would cut costs further in marketing but spend more on technological innovation by hiring in engineers, Bloomberg reported.

“We are still far under-indexed in terms of our technology headcount, compared to traditional California-based technology companies,” Mason said. “We expect to continue to invest aggressively.”

International revenue rose more sharply than North American revenue. Groupon posted a yearly revenue rise of 771 per cent internationally to $980.9m following an major overseas expansion, compared to a revenue rise of 221 per cent in North America, to $643.8m.

In 2011 as a whole, Groupon posted a net loss of $203.4m – compared to a loss of $420.3m in 2010. Revenue for 2011 was $1.62bn – up 419 per cent year on year.

The Chicago-based company employs over 10,000 people and operates in 47 countries. It raised $700m after its IPO in November though stock prices have fluctuated since.®