- The difference between Groupon's (NASDAQ:GRPN) Q1 North American Local (deals) billings growth (+12% Y/Y to $512.6M) and revenue growth (+2% to $180.8M) is receiving much scrutiny as shares fall to new 2015 lows post-earnings.
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Morgan Stanley (Equal-weight) observes commission rate concessions to merchants and customer couponing are hurting NA Local take rates. At the same time, it adds management is still aiming for 20%+ Y/Y NA Local billings growth.
- Credit Suisse (Neutral) notes take rates were hurt by order discounts meant to drive traffic/sales growth. The firm could become more positive on Groupon if it sees a greater "focus on improved demand generation against the supply base it has already assembled: 1) greater traction in the local segment through mobile offerings and Page product, 2) greater consumer engagement and adoption as company's Pull initiatives gain traction, 3) margin expansion in the goods business through logistics optimization."
- On the CC (transcript), CFO Jason Child defending Groupon's discounting. "While dilutive to margin in the short-term order discounts are an important means of driving traffic, awareness and at the end of the day transactions. Our goal is to ultimately maximize gross profit dollars ... take rates are likely to remain around the 35% level as we make continued investments in quality and growth but if we need to trade up margin at times to accelerate growth we may do so."
- CEO Eric Lefkofsky reiterated Groupon's commitment to growing search-derived traffic. He also declared the company is now focused on growing e-mail-driven revenue after stabilizing traffic (previously hurt by Google's creation of a Gmail Promotions tab).
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Q1 results, details