Groupon Reports Q3 2012 Earnings Significantly Below Expectations: $568.6M In Revenue, Operating Income Of $25.4M, $0.00 EPS

Groupon just released its Q3 2012 earnings report, marking the company's first full-year cycle of earnings reports since its IPO in November 2011. The company reported $568.6 million in revenue and a net operating income of $25.4 million.

Net loss attributable to common stockholders of $3.0 million, or $0.00 per share, which included stock-based compensation and acquisition-related expenses of $25.1 million and a diluted share count of 653.2 million, versus a net loss of $54.2 million and a loss per share of $0.18 in third quarter 2011

Ahead of the announcement, most analysts expected the company to post a profit of about $0.04 per share and revenue of around $590 million. Last quarter, Groupon reported revenue of $568.3 million and a net income of $28.4 million.

Groupon sees "continued challenges in Europe"

"Our solid performance in North America was offset by continued challenges in Europe," said Andrew Mason, CEO of Groupon. "Groupon Goods has evolved into a second major category that our customers clearly love. With deals on everything from designer sunglasses to big-screen televisions to most-wanted toys, we think it will be a great gifting destination this holiday season."

One thing a lot of analysts will also watch for in this release is how many active customers the company has at the end of this quarter. This quarter, Groupon reported that it had 39.5 million active customers as of September 30, 2012. That's up 37% from the year-ago quarter

Groupon, of course, had somewhat of a stormy first year on the stock market. The stock was trading around $3.90 before the markets closed today. That's down roughly 80% from the $20 price the company set for its IPO.

The company itself has also gone through a hard few months as the group buying/daily deals market moves out of its hype phase and into a period of consolidation. Just today, Groupon confirmed that it was laying off about 80 members of its sales team. The company also continues to have legal troubles. Last week, for example, the SEC asked Groupon for more financial disclosures about revenue from its new businesses like merchandise sales. The SEC is also asking Groupon for clarification about why it underestimated how many of its customers would request refunds.

Here are some of the highlights from the report according to Groupon:

• Continued strength in North American revenue growth. North American revenues grew 81% year-over-year, driven by growth in direct revenue, or the amount earned from the sale of products for which Groupon is the merchant of record.
• Rapid growth in Groupon Goods. Groupon Goods reached an annual run rate of nearly $1.5 billion in global billings and nearly $500 million in revenues shortly after its one-year anniversary.
• Improved marketing efficiencies. Customer acquisition costs improved 55% year-over-year, enabling the reduction of marketing spend by 58% compared with the third quarter 2011.
• Subscriber milestone. In the third quarter 2012, the Company surpassed the 200 million subscriber mark.
• Solid growth in active customers. As of September 30, 2012, Groupon had 39.5 million active customers, an increase of 37% year-over-year.
• Growing merchant selection and quality. For the third straight quarter, Groupon featured more than 100,000 unique merchants, with the number of active deals increasing by nearly thirteen times year-over-year to more than 27,000 as of the end of the third quarter.
• Mobile transaction activity remains high. In October 2012, about one third of North American transactions were completed on mobile devices, an increase of nearly 30% compared with October 2011.
• Further expansion of merchant tool suite. In the third quarter 2012, the Company expanded its suite of merchant tools, with the launch of Groupon Payments, as well as Breadcrumb, an iPad-based point-of-sale system for restaurants.