Business

Groupon results better than expected

Groupon staff in front of logo
Image caption Investors have been concerned about Groupon's business model for some time

Daily deals firm Groupon has reported first-quarter results ahead of market expectations.

Revenues in the first three months of the year came in at $601.4m (£387m), up 7.5% on a year ago. Analysts had forecast revenues of $590m.

Groupon's net loss narrowed to $3.24m from $3.59m a year earlier. Shares in the company surged 12% to $6.26 in extended trading in New York.

Co-chief executive Eric Lefkofsky said he was "encouraged" by the results.

Mr Lefkofsky and Ted Leonsis were named as temporary joint chief executives at the end of February when founder Andrew Mason was ousted after the group posted another quarterly loss.

Groupon's shares have lost around three-quarters of their value since floating at $20 per share in November 2011, on concerns that its business model offering bulk discount deals may be unsustainable.

Many investors have been concerned for some time that Groupon's customers are tiring of the deals it offers, and that it is facing more competition from other start-ups and from big firms such as Amazon and Google, who have been copying its strategy.

Improved margins

In its latest results, there was a clear difference between the company's performance in North America and in the rest of the world.

North America revenues increased 42.3%, while international revenues fell 18.4%.

"We are encouraged by our results, as our local revenues accelerated and our margins improved over the prior quarter," said Mr Lefkofsky.

"We had record mobile performance as 45% of our North American transactions came from mobile in March, and more than seven million people downloaded our apps in the quarter."

Mr Lefkofsky and Mr Leonsis have been trying to turn around Groupon's struggling European business while continuing to expand in the US.

Analysts expect a slimmed-down company under the new leadership, as the firm continues to hunt for a permanent chief executive.

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