Difficulties at Groupon Inc. Continue As It Reports a Net Loss of $38 Million

Groupon saw its revenue grow considerably. However, it saw corresponding gains in its costs of products as well as operating expenses, which resulted in a loss in the first quarter.

May 6, 2014 at 11:47PM

As a result of increased operating expenses, Groupon (NASDAQ:GRPN) reported a loss of $38 million, or $0.06 per share, in the first quarter of 2014, well above the $4 million loss seen through the first three months of 2013.

Total revenue at Groupon rose by 26% from $601 million to $758 million. This was entirely attributable to its direct revenue -- the products it sells directly to consumers -- which more than doubled, from $163 million to $331 million. Its third-party revenue actually fell by $13 million, or 3%, to $426 million.

"Our marketplace continued to gain traction and growth in our mobile business accelerated, with more than 10 million app downloads this quarter and mobile transactions reaching 54% in March," said Groupon CEO Eric Lefkofsky in the earnings announcement.

However, Groupon had almost identical growth in the cost of its revenue, which grew by $150 million, or 67%, to stand at $371 million. As a result, its gross profit rose by only $7 million, or 2%, to stand at $386 million.

In addition, the discount retailer saw a significant increase in its marketing expenses, which grew from $50 million in the first quarter of 2013 to $79 million in the most recent quarter. In addition, its selling, general, and administrative expenses rose by nearly $17 million, or almost 5.5% to $325 million.

In total, the operating expenses at Groupon rose by $48 million relative to the first quarter of 2013, which outpaced its gross profit growth. As a result, it saw an operating loss of $20 million in the first quarter of this year, compared with a profit of $22 million over the same time period last year.

Groupon did further clarify its expectations for 2014, as it said it expects to see its adjusted EBITDA exceed $300 million. It previously said it thought its adjusted EBITDA would be slightly above the $287 million seen in 2013. Its adjusted EBITDA stood at $40 million in the first quarter of 2014, versus $72 million in the first quarter of 2013, a decline of nearly 45%.

"We're on track with our plans in 2014 to invest in the growth of Local, improve our Goods margins, and drive profitability in our International operations," Lefkofsky concluded, in his prepared remarks. "As a result, we have further confidence in our results for the back half of the year and have increased our full-year outlook." 

Patrick Morris and The Motley Fool have no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information