UBS analyst Eric Sheridan (Neutral, $6.50 PT)
"We were positive on: a) continued traction within mobile (greater than half of all transactions, 92mm app downloads) & "Pull" (June 2014, 10% of NA traffic used search); b) a second consecutive quarter of EMEA customer growth (following six quarters of decline); c) stabilizing Groupon redemption trends, with the average number of unused Groupon's per customer down more than 25% YoY; and d) 20% QoQ growth in active deals (now at 240k from 200k end Q1 2014). We were less positive on: a) continued deceleration in NA unit growth, growing 8% YoY vs. 14% in Q1 2014; b) elevated marketing levels (order discounts, customer acquisition) and plans to spend more heavily on performance advertising (e.g., search) in 2H 2014; c) higher than expected investments required for TicketMonster; and d) continued lack of gross profit dollars within the 1P business (100% of gross profit dollars still generated by 3P)."
Jefferies analyst Brian Pitz (Hold, $7 PT)
"Groupon delivered a largely in-line Q but guidance came in below expectations. Mgmt has a sound strategy to get the biz back on its prior growth trajectory but the pace of execution is still somewhat underwhelming. In addition, LT margin profile remains uncertain as Goods biz ramps up and Co moves deeper into eCommerce. We reiterate our Hold rating but lower PT to $7."
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Sterne Agee analyst Arvind Bhatia (Buy, $12 PT)
"While the optics of near-term results may seem mediocre to slightly disappointing, we think the progress we were hoping for in 2Q was mostly there. North America Local billings improved slightly (though offset by lower take-rate) and accelerated towards the end of the quarter/beginning of 3Q, Goods gross margins improved more than anticipated and RoW (ex acquisitions) came close to break-even."
Deutsche Bank analyst Ross Sandler (Buy, $7 PT)
"GRPN's performance hit its fourth consecutive quarter of disappointing and sluggish growth, but despite some EMEA headwinds, billings, GP and EBITDA were +1%, -3% and +11% vs. our estimates, more or less in-line. Objectively, we see several silver-linings, including: 1) EV is sub-$4B, and valuation has been halved in the past two prints while 2015 EBITDA has been reduced far less, 2) local-mobile-transactional companies are proving to be strong strategic footprints, highlighted by the eight parties interested in OpenTable, and GRPN is in over 50 countries with significant scale, 3) Marketplaces are fragile and take time to turn, and comps get easier starting in 3Q (Gmail and purchase-to-redeem, and 4) Groupon's business is in much better shape than last time shares were below $6 in 2013. We've reduced our EBITDA to well below guidance again, shares remain Buy rated."
-- Written by Chris Ciaccia in New York
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