Daily deals site Groupon Inc(NASDAQ:GRPN) reported than better than expected profit in its second quarter but the market gave its shares the thumbs down on concerns over growth.
The company's revenue rose 45 percent in the quarter to June to $568.3 million, but it said if it had accounted for goods sales the way it has done for deals revenue, growth would have been just 30 percent. Analysts have also not been satisfied with the way the company was getting revenues - through actually selling items rather than just directing customers to deals.
Analysts were looking for revenue growth of 46 percent.
Groupon's net income in the three months to June 30 came to $28.4 million, or 4 cents per share, compared to a net loss of $107.4 million a year ago.
Groupon shares which had fallen 19.5 percent on Monday fell more than 24 percent on Tuesday and its shares were trading at $5.73 on the Nasdaq.
The company attributed its weak growth to the European slowdown. More than half of the company revenues are from outside North America and a major portion of that is from Europe.
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Groupon CEO Andrew Mason told analysts that deals for services such as laser hair removal and luxury hotel stays were seeing poor response.
"These more discretionary offers are more susceptible ... as macroeconomic conditions have deteriorated," he said.
Weakening of the euro and the British pound against the U.S. dollar also results in fewer dollars and affected revenues.
Groupon said that it planned to combat recessionary conditions in Europe by offering personalized deals and a better mix of them.
In North America it increased its revenue through Groupon Goods, where, instead of offering discounts it directly sell items that it buys from manufactures.