TMCnet Feature

Although the popular online coupon site Groupon beat earnings expectations, the company lost money in the 4th quarter of 2011, apparently due to a tax expense, causing its stock to fall.

This is the first time Groupon has announced earnings as a publicly traded company. The company posted a loss in the fourth quarter despite gains in revenue.

The earnings per share was -$0.02 versus a projected $0.03. The company’s revenue was $506.5 million, while the Wall Street estimate was $475.15 million. Groupon’s revenue guidance fell between $510-$550 million, where JP Morgan (News - Alert) had estimated $513 million. Total billings were $1.25 billion versus JP Morgan’s estimate of $1.21 billion. The company’s operating income was $15 million versus an operating income of -$13 million.

Shares of the company tumbled, but appeared to be recovering.

Speaking in the company’s first earnings conference call Groupon CEO Andrew Mason said that international expansion and a subsequent large tax bill were responsible for the company’s fourth quarter loss. Mason said the operating business is actually profitable.

The company also recently opened a new headquarters in Palo Alto (News - Alert), California. In addition to the company’s core deals product, Groupon is also growing its Groupon Goods and its Groupon Getaways.

Mason said there were several key drivers for the company’s profits. He said the company had strong repeat purchasing behavior.

“It’s durable over time,” Mason said.

He also cited the company’s efficient marketing, which only accounts for the 30 percent of the company’s costs.

“Third, we are more operationally excellent,” Mason added.

Despite the loss, Mason says Groupon is poised for more growth, with one percent of total local transactions. Mason said there was still a lot of opportunity for the company, and that it’s still in the early days. He said Groupon was “on the cusp of a sea change.”

Groupon CFO Jason Child reiterated Mason’s assurances, saying that it was still the early stages internationally.

Groupon spent $0.07 per share on taxes, Mason said.

The company also made about $35 billion in its oldest best market, but lost $40 million in less mature markets.

Mason also said that Groupon would continue to spend less on marketing. Spending on marketing has decreased 22 percent over the year and eight percent over the quarter.