Groupon Q4 off to strong start, amid difficult post-IPO

Though Groupon took a stumble on the markets after it dipped below its $20 IPO price, its overall business looks healthy, with high performance profit margins.
Written by Zack Whittaker, Contributor on

Despite its stock tumbling over the last couple of weeks post-initial public offering, Groupon managed to get off to a strong fourth-quarter in October, as the company surged past its closest rival, new data out today suggests.

Industry tracker Yipit said that Groupon, even though it struggled after its IPO where the company dipped sharply below its initial price of $20, its overall performance suggests something entirely different.

Groupon over 3 months -- (Source: Google)

Groupon's gross billings were up by 22 percent from September, totalling $176 million. LivingSocial, the nearest competitor to coupon-serving giant, only managed just shy of $60 million in October, down 8 percent.

Travel has been a new source of revenue for Groupon, after it announced its new travel business, Groupon Getaways, which works in partnership with Expedia. Alone, this is thought to have generated gross billings of $22 million in October, up from $8.6 billion on the previous month, Yipit estimated.

Groupon Getaways is now 12-13 percent of Groupon's North American business.

But as the company begins to reach out to those who travel, in a bid to wider its spread on a market it already had at its disposal, Groupon Getaways has far lower profit margins than the company's main daily deals business, Reuters reports.

CFO Jason Child said during an investors meeting on Wednesday that its travel business has margins in the mid-20 percent range, while Groupon itself takes 40-45 percent of the company's take rate.

Groupon Goods, however, has margins below the 20 percent range.

While Groupon's take rate remains steady and healthy, the new travel and trading businesses has work to do before it can enjoy the same level of profit stability.


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