Groupon Loss Narrows, To Acquire Korean Ticket Monster

(RTTNews) - Groupon Inc. (GRPN) Thursday reported a loss for the third quarter that narrowed from a year ago, driven mainly by a 5 percent growth in revenues and lower marketing costs. Nevertheless, revenue growth for the quarter fell short of Wall Street's expectations, as demand for its offers softened.

In a separate development, the company has agreed to acquire Korean e-commerce firm Ticket Monster for $260 million in a cash and stock deal.

Following the news, shares of the company surged 11 percent in after hours trade.

The daily-deal website's revenue for the third quarter grew 4.7 percent to 595.1 million from $568.6 million a year ago. Twenty-two analysts polled by Thomson Reuters estimated revenues of $615.69 million for the quarter.

Growth in revenues largely reflect strong performance at North America, where revenues increased 24 percent, while EMEA slipped 21 percent and Rest of the World declined 4 percent.

Gross billings, the total amount collected from customers for goods and services, rose about 10 percent to $1.34 billion.

CEO Eric Lefkofsky said, "Mobile adoption continued to increase in Q3, reflected in our record 9 million app downloads. We're pleased with our progress, but we still have work to do as we transform the business from our daily deal email roots to a full e-commerce marketplace."

Groupon has been able to capitalize on consumer's increasing use of smartphones and tablets, with more than half of its North American transactions came from mobile in September. To date, more than 60 million people have downloaded Groupon apps worldwide.

Gross margins for the third quarter dropped to 60.47 percent from 68.0 percent a year ago. Nevertheless, marketing costs dropped to $53.3 million from $70.9 million a year ago.

Chicago, Illinois-based Groupon's third-quarter loss narrowed to $2.58 million or breakeven per share from $2.98 million or breakeven per share last year. Adjusted earnings were $14.47 million or $0.02 per share. On average, 23 analysts expected Groupon to earn $0.01 per share for the quarter. Analysts' estimates typically exclude special items.

Looking forward to the fourth quarter, the company expect adjusted earnings in the range of $0.00 to $0.02 per share and revenue between $690 million and $740 million. Analysts currently estimate earnings of $0.06 per share on revenues of $723.68 million for the quarter.

Groupon has agreed to buy Ticket Monster, which is owned by peer LivingSocial Inc., for $260 million. The price includes at least $100 million in cash and up to $160 million in stock, with the final cash and stock allocation to be determined upon close. The deal is expected to close in the first half of 2014.

Ticket Monster, which was founded in 2010, has consistently seen year-over-year billings growth in excess of 50 percent, with annual billings of more than $800 million today, the company said in a statement.

GRPN closed Thursday's trading at $9.50, down $0.51 or 5.05%, on the Nasdaq. In after hours, the stock however gained $1.03 or 11.05%.