Groupon Misses Revs, Guides Low; EA Beats

After the closing bell Tuesday, both Groupon (GRPN – Analyst Report) and Electronic Arts (EA – Analyst Report) reported quarterly earnings results. The daily deals company met Q1 earnings expectations of -$0.01 but came up well short of sales estimates: $750 million as opposed to $768 million expected. EA beat on both top and bottom lines — earnings of 27 cents per share (accounting for stock-based compensation) easily topped the 14 cents expected for its fiscal Q4 by 93 percent; revenues of $896 million was well ahead of the $850 in the Zacks consensus estimate.

As a result, shares of each stock are on a very different trajectory in after-market trading — Groupon shares had fallen as much as 3.5 percent following its earnings announcement, whereas EA has seen a 4.75 percent lift in late trading today. That said, Groupon stock has fought back from its initial lows in the after-market.

Groupon cited revenue issues related to a strong dollar hurting its foreign exchange figures; last quarter it was reported that Europe accounted for 30 percent of Groupon’s business. In its Q1 results the company counted more than 425K daily active deals, 200K of which took place in North America. Active customers (coupon-buyers from the past 12 months) grew 7 percent year over year to 48.1 million.

However, Q2 revenue guidance for Groupon was lowered to $700-750 million, well below the $776 million in the Zacks consensus estimate. We expect analysts revisions to tick down in the coming days to adjust for this; it would then likely have a negative effect on the Zacks Rank, which currently sits at #1 (Strong Buy).

EA say its monthly active user (MAU) mobile user metric jump to 165 million in its Q4 of 2015. EA also touted fiscal year record net revenue, digital net revenue and mobile revenue. The company also put forth a $1 billion share buyback program.

Year-to-date, EA is up more than 25 percent, and it’s grown more than 100 percent year over year. The average positive earnings surprise for the company over the last 5 quarters is roughly 300 percent. The maker of Madden Mobile, among many other titles, is currently listed as a Zacks Rank #3 (Hold).

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Author: Travis Esquivel

Travis Esquivel is an engineer, passionate soccer player and full-time dad. He enjoys writing about innovation and technology from time to time.

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