What happened
Shares of coupon company Groupon (GRPN -2.06%) jumped as much as 10.3% on Wednesday, following the company's second-quarter earnings release. The stock is up 8.5% at the time of this writing.
So what
For its second quarter, Groupon reported revenue and adjusted earnings per share of $662.6 million and $0.02, respectively. The consensus analyst estimate for revenue and adjusted earnings per share (EPS) was $670 million and breakeven, respectively. Groupon's higher-than-expected profitability may be a key reason for Groupon stock's rise on Wednesday.
Image source: Getty Images.
In what seems like a nod to Groupon's underperforming revenue and its outperforming adjusted earnings per share, the company provided some commentary on why revenue may take a hit at the expense of management's increasing focus on profitability.
Our focus is to maximize gross profit, which may come at the expense of revenue. This emphasis includes an increasing shift toward offerings in our higher margin, more differentiated Local category, from our Goods category.
Groupon's focus on improving profits was also evident in management's guidance. Groupon raised the bottom of its guidance for full-year earnings before interest, taxes, depreciation, and amortization (EBITDA), guiding for EBITDA between $215 million and $240 million.
Also worth noting: Groupon said it added 300,000 net new active customers in North America during the second quarter of 2017 compared to the first quarter of 2017. Groupon now has 31.9 million active customers in North America.
Now what
Going forward, Groupon CEO Rich Williams says the company is "excited about the growing strength of our local marketplace." As the company shifts its business' focus toward higher-margin local deals, Williams says local commerce remains "a vast opportunity."
