The following is an excerpt from Alistair Barr | May 14, 2012 | Reuters.com |
(Reuters) – Groupon Inc posted its first quarterly profit by reining in marketing spending and signing up more customers and merchants, sending its stock about 18 percent higher.
The fledgling company started by music graduate Andrew Mason, which had lost half its value this year on concern about waning demand for its daily deals and persistent accounting problems, on Monday surpassed Wall Street’s expectations for earnings and revenue growth.
The Chicago-based company revised fourth-quarter results at the end of March, admitting to “material weakness” in its financial statements and triggering a stock price slide. Even taking into account Monday’s surge, the shares remain well below $20 initial public offering level in November.
Mason, who was criticized last year for heavy spending, told analysts on a conference call he wanted to expand Groupon’s mobile business, while using rewards programs and other technology to attract and retain merchants and customers overseas.
He said the company will release new mobile application software in coming months, now that about a third of North American transactions happen on smartphones and other mobile devices.
“Revenue growth was impressive and they also had material margin expansion,” said The Benchmark Company analyst Clayton Moran. “There are no signs of competitive pressure in this report. The take rate of 41 percent is very encouraging. Investor fears around competition and sustainability have been overdone.”
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