Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of RetailMeNot (SALE +0.00%) initially plunged over 12% early Tuesday, but recovered to trade down around 3.5% as of 1:30 p.m. after the digital offer marketplace announced strong fourth-quarter results, but followed with weaker-than-expected guidance.
So what: Quarterly revenue grew 11% year over year to $87.4 million -- including 90% growth in mobile revenue to $22.2 million, or 25% of RetailMeNot's total -- which translated to adjusted earnings of $0.43 per share. Analysts, on average, were only expecting earnings of $0.32 per share on sales of $86.1 million. Adjusted earnings before interest, taxes, depreciation, and amortization also rose 17% to $36.1 million.
However, RetailMeNot also told investors to expect current-quarter revenue of $57 million-$60 million, with adjusted EBITDA of $14 million-$16 million, reflecting continued investments in sales and mobile-centric initiatives. Wall Street was expecting sales and earnings of $68.14 million and $0.22 per share, respectively.
Finally, for the full year 2015, RetailMeNot anticipates revenue of $275 million-$285 million -- or growth of 6% at the midpoint -- and adjusted EBTIDA of $92 million-$100 million. Analysts were modeling higher sales of $305.3 million with earnings of $1.06 per share.
Now what: RetailMeNot explained the majority of its growth is coming from lower monetized mobile visits. Even so, RetailMeNot's founding CEO, Cotter Cunningham, said, "We believe the current share price understates the strength of RetailMeNot's long-term growth initiatives." As a result, the company also announced Tuesday that it's board has authorized a new stock repurchase program of up to $100 million, effective immediately and to be completed over the next two years. This certainly took away some of the sting of Tuesday's pullback. Given its solid balance sheet and assuming it continues to capitalize on the growth of mobile users over the long term, I'm convinced patient RetailMeNot shareholders shouldn't be overly concerned about the stock's short-term volatility.
