Groupon's first quarter results were better-than-expected. Executives touted growth and argued the accounting hubbub is behind the deals company.
Groupon's first quarter results were carried by massive growth outside the United States as international revenue surged. CEO Andrew Mason touted technology innovation, Groupon's mobile progress, governance improvements and the aim to be "the operating system for mobile commerce."
The company reported better-than-expected first quarter results and surprised a few observers. After all, Groupon's post-IPO performance has been sketchy and the company recently had to restate earnings for the fourth quarter amid accounting snafus. As a result, Groupon added board members with accounting and banking experience. Groupon's goal: Shed the tag that the company has material weaknesses in its financial controls.
Groupon reported a first quarter net loss of $11.7 million, or 2 cents a share, on revenue of $559.3 million. Non-GAAP earnings for the first quarter were 2 cents a share. Wall Street was expecting a profit of a penny a share on revenue of $530.6 million.
Meanwhile, Groupon projected second quarter revenue between $550 million and $590 million. Wall Street was expecting revenue of $558.7 million.
In after-hours trading, it was obvious that investors were leaning the wrong way. Groupon shares surged about 15 percent.
On an earnings conference call, Mason touted Groupon's North American sales, a move that was a bit odd considering international revenue carried the quarter. Groupon is emulating its U.S. splash with expansion into international markets.
Judging from executive comments, it was clear that Groupon was trying to put recent account turbulence behind it. The company added that it was putting in new financial controls to bolster its reporting and governance.
Here's a series of quotes from Mason on the earnings conference call:
We had more gross new customers in Q1 than we did in Q4, while at the same time reducing our marketing spend. And although was our R&D and overhead expenses head of North American P&L we're still seeing 16.7 percent operating margins in North America. We've also begun to see the benefits as technology and personalization initiatives in North America.
We're excited by the progress we're making in technology and product innovations in North America, and we believe that they open up further upside as we roll them out globally.
The services we are deploying are a natural progression from our current offerings and build upon Groupon's core value proposition for consumers and merchants. If you think about the evolution of Groupon, our first phase was all about local daily deals. Our second phase involved the expansion of Groupon both in terms of categories like product and travel and in terms of the expansion of our platform to mobile. Our third phase is all about making our platform smarter.
There are challenges ahead. For instance, Groupon noted that its international operations have different technology platforms. As a result, features like Smart Deals can't be rolled out abroad. Groupon plans on a massive integration project. Nevertheless, Groupon has grown up a bit. The big question is whether it can convince investors that it can be the e-commerce engine of the future.