Quick thoughts on GRPN 4Q12 earnings report

Groupon reported 4Q12 results today and the WSJ has live notes from the earnings call. Five take-aways from the report and call:

  • Email drives less than 50% of transactions. This syncs with Yipit data published in the WSJ earlier this week showing less dependence on daily deals and diversified product mix (chart below).
  • International is continued cause for concern. Revenue was down 16% year-over-year in 4Q12 while North America more than doubled. This despite 22% growth in both segments active customers to a total of 41MM.
  • Marketing spend decreased $94MM year-over-year to $61MM in 4Q12. International accounted for 82% of the total decrease.
  • Groupon Goods is now a $2B run rate business.
  • 40% of transactions happened through mobile in January 2013. Andrew Mason on those customers: “The data is very clear, [mobile users] have a higher lifetime value, retention is higher, so the transition to mobile is a very good thing for Groupon.”

As Sarah Lacy postulated last year, buying revenue and international growth through acquisitions can be a difficult strategy. This point of view was reinforced by Amazon’s 3Q12 results which exposed a $496MM impairment charge, rumored to be related to international acquisitions gone bad. Just last week, LivingSocial raised $110MM for 7.5% of the company, valuing the company at $1.5B, a far cry from their reported $6B Series E valuation 14 months ago.

No matter how you slice the numbers, this was a big down round for LivingSocial which, like Groupon, must still convince investors of this model’s long-term viability.

Groupon estimated product mix:

Groupon deals by type in North America 2013-02-26