Groupon Inc. says it’s beginning to benefit from the reopening of the economy, helping the discount marketplace deliver better-than-expected earnings and revenue at the start of 2021 and increase its annual outlook Thursday.
is “seeing merchants come back in lots of categories” now that its largest market, North America, is beginning to recover from the pandemic, Interim Chief Executive Aaron Cooper told MarketWatch. Categories like Botox and liposuction were “COVID-era surprises” that are “continuing to go strong,” Cooper said, while other areas like massages, outdoor racing classes and indoor escape rooms are starting to heat up.
The company on Thursday revealed first-quarter net income of $14.6 million, or 48 cents a share, versus a loss of $213.5 million, or $7.53 cents a share, in the year-earlier quarter, when Groupon recognized impairment charges and saw higher marketing spending.
After adjusting for stock-based compensation and other factors, Groupon earned 25 cents a share, whereas the company lost $1.63 a share on an adjusted basis a year earlier. Analysts tracked by FactSet expected a 66-cent adjusted loss per share for the first quarter, with that consensus figure reflecting estimates from five of six analysts who cover Groupon’s stock.
Groupon’s revenue for the first quarter fell to $264 million from $374 million, while analysts were projecting $224 million.
Groupon is seeing traction from merchants with its new “offers” initiative that lets businesses advertise a fuller suite of services on Groupon at lower discounts than the steeper deals the company was once known for. Cooper said that merchants are also responding well to Groupon’s new self-service function, which lets businesses add and change their listings without having to call up a Groupon representative.
On the consumer side, Groupon is in the midst of rolling out a new interface that makes it easier for customers to find what they’re looking for, make repeat purchases, and see personalized results. The company is “moving beyond the long, infinite scroll,” Cooper said, with the new experience currently available for about 20% of the North America base.
Groupon had 15.2 million North America active customers as of the first quarter, a metric the company defines as customers who’ve made at least one purchase over a trailing-12-month basis. The company had 17.5 million North America active customers as of the fourth quarter.
Chief Financial Officer Melissa Thomas said that a key focus for Groupon is to drive repeat purchases among its customers, calling that “really the unlock of our financial model.”
Though Groupon pulled back on marketing spending in the first quarter relative to a year earlier during the pandemic, Thomas expects the company to “lean into the recovery and step up marketing investment as a percentage of gross profit,” which would also serve to drive awareness of the changes Groupon has made to its platform.
Groupon upped its full-year revenue outlook and now expects $950 million to $990 million. Its prior forecast was for $930 million to $980 million.
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