RetailMeNot -24.9% on soft guidance, search traffic worries


RetailMeNot (NASDAQ:SALE) guided on its CC (transcript) for Q3 revenue of $53M-$57M and full-year revenue of $262M-$270M, below consensus estimates of $62.6M and $282.1M.

The company admitted organic search traffic growth has been hit by mid-Q2 Google algorithm changes (previous). It adds monetization for e-commerce promotions has been hurt by lower growth for organic search (has higher conversion rates), and by "an increase in the proportion of ... organic traffic that is directed to un-monetized offers."

"Some recovery" has been seen in organic search growth, but rates still aren't at the levels experienced earlier this year. Organic search made up 64% of Q2 Web traffic. RetailMeNot is counting on a TV ad campaign, initiatives with retail clients, and personalized promo e-mails to boost traffic going forward.

RBC's Mark Mahaney has cut shares to Hold. He thinks Google's efforts to better monetize e-commerce traffic via solutions such as Product Listing Ads "may constitute a substantial long-term challenge to SALE’s fundamentals," and states implied Q4 guidance "implies a Q/Q recovery in EBITDA margins of approx. 1,000 bps, which seems overly aggressive."

Q2 results, PR

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