Groupon names Eric Lefkofsky CEO as second quarter sales jump 7pc
Groupon named co-founder Eric Lefkofsky its chief executive and reported a record quarter for its North American business, signalling growing momentum in its comeback effort that saw its shares jump almost 20 per cent.
Groupon named co-founder Eric Lefkofsky its chief executive and reported a record quarter for its North American business, signalling growing momentum in its comeback effort that saw its shares jump almost 20 per cent.
The company, which also announced a US$300 million share repurchase programme, reported a better than expected 7 per cent jump in second-quarter revenue to US$608.7 million, as sales in the United States and Canada climbed 45 per cent.
Lefkofsky, who was named interim chief in February, has pushed on with his mobile-centric strategy since fellow founder Andrew Mason was replaced in February. The former chief executive had presided over a precipitous share price decline, to below US$5 from its US$20 debut in 2011.
The stock has gained 80 per cent this year and hit its highest since July 2012 this week, after rising to US$10.35, in after-hours trade on Wednesday.
"I think the news about installing Lefkofsky played a big part," said Tom White, an analyst at Macquarie Research. "Investors have been very impressed by the progress he's made since being made interim head."
With its core daily deals business model in steep decline, Groupon in recent months has re-invented itself as a more traditional e-commerce business that sells long-term deals, particularly through its smartphone app.
Lefkofsky and other executives told Wall Street analysts on Wednesday that e-mailed deals, once the linchpin of Groupon's sales strategy, now accounted for only 40 per cent of its quarterly revenue. Instead, Groupon's customers were increasingly visiting the site to search for goods they were actively seeking, they said.
For Groupon to succeed, Lefkofsky said it needed to focus on refining its algorithms to present goods relevant to a user's interests, while also improving its product suite for sellers, which includes rewards tracking programmes and credit card processing tools.
Groupon enjoyed a record quarter for revenue in North America, its home market. Gross billings, or the total value of purchased goods and services - of which the company takes a cut - rose 30 per cent in that region, outpacing a 10 per cent expansion rate overall.
Revenue in the United States and Canada grew 45 per cent, offsetting a 24 per cent slide in Europe, the Middle East and Africa and a 26 per cent fall everywhere else.
“North America continues to see strong growth and we made good progress in EMEA which flipped to positive gross billings growth” the second quarter, Chief Financial Officer Jason Child told Reuters on Wednesday.
“We’re now shifting our focus to the rest of the world.”
Groupon posted a second quarter net loss of US$7.6 million, or US$0.01 per share, compared with a year ago profit of US$28.4 million, or 4 cents a share.
Excluding one-time items, it earned 2 cents a share, level with analysts’ expectations.
