Groupon Inc., the largest daily-deal website, reported first-quarter profit that topped estimates as marketing costs dropped and it expanded internationally in its second period as a publicly traded company.
Profit excluding certain costs was $16.3 million, or 2 cents a share, the Chicago-based company said in a statement Monday. Revenue jumped 89 percent to $559.3 million from $295.5 million a year earlier. Analysts had projected, on average, profit of 1 cent on sales of $530.6 million, according to data compiled by Bloomberg.
The coupon site is attempting to rebuild investor confidence after shares dropped more than 40 percent since its November initial public offering, one of the worst public market debuts for a Web company since the dot-com crash. Groupon could bounce back from accounting errors and regulatory missteps by boosting profit from international growth and new products, said Jeffrey Houston, an analyst at Barrington Research Associates.
“What it needs to do to have the stock rebound is start posting good results,” Houston, who is based in Chicago and recommends buying the shares, said in an interview before the results. “As more of cash flow is driven off of profitability, that’s going to be a huge benefit.”
Groupon shares soared as much as 15 percent to $13.55 in extended trading following the report. Earlier, they had climbed 19 percent to $11.74 at the close in New York.
The stock lost 48 percent of its value in its first six months on the public market, a period that ended on May 3. Since 2001, only four companies have performed worse among newly public U.S. Internet stocks.
Groupon generated 57 percent of its revenue outside the U.S. in the first quarter. Almost 30 percent of Groupon’s transactions in North America were completed on mobile phones in April, up from 25 percent four months ago, Chief Executive Officer Andrew Mason said in a letter to shareholders last week.
In February, Groupon reported fourth-quarter operating income of $15 million, yet later reversed that into an operating loss of the same amount after restating results because of higher refunds to merchants. At the time of the restatement in March, Groupon said it discovered a “material weakness” in its financial controls.
The company’s first-quarter net loss narrowed to $11.7 million, or 2 cents a share, from $146.5 million, or 48 cents, a year earlier.
The company makes money by selling discounts -- known as Groupons -- from businesses such as restaurants and nail salons. It then splits the revenue with the businesses.
Last month, Groupon said Starbucks Corp. CEO Howard Schultz exited its board, and the company added Daniel Henry, the finance chief of American Express Co., and Robert Bass, a vice chairman of Deloitte LLP, as directors.
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