Groupon lays off 80; tough quarter


Groupon said 11/8 it laid off 80 sales employees this week, reflecting ongoing efforts to automate some of its sales functions. Q3 earnings, reported after the market closed, missed Wall Street expectations and prompted a sharp decline in the company’s stock in after-hours trading, reported The Chicago Tribune.

In a conference call to discuss Q3 earnings, CEO Andrew Mason said the company has spent six to nine months looking at technology tools that can replace inefficient manual processes, particularly in sales functions.

“Groupon announced several months ago it would be using technology to increase productivity through automation,” the company said in a statement. “This week we reduced the sales team by approximately 80 members as part of that effort. We will always aim to optimize business operations wherever opportunities are identified.”

While the daily deals company did not disclose where the affected employees were based, most of its sales staff is in Chicago. Groupon employed 11,866 people as of the third quarter. Of this, 5,087 employees were in sales, meaning the cuts represent less than 2% of its sales force. Compared with Q2, however, Groupon’s sales staff has shrunk. In Q2, the company employed 5,587 people in sales out of a total headcount of 12,820.

“We’ve seen just in the last several months the productivity of our sales force improve, increasing the number of deals that a single sales person can close because of the new tools that we’ve released,” Mason said, adding: “Those sorts of things are allowing us to increase productivity and continue to scale without adding the same headcount as we have in the past.”

It’s not all bad news, though. Groupon’s revenue from North America surged more than 80% from the same period last year, while International revenue managed only 3% growth. As a result, overall revenue came in at $568.6 million — below the company’s previously forecasted range of $580 million-to-$620 million.

“I think they had a tough quarter,” Arvind Bhatia of Sterne Agee told WSJ, who noted that “expectations were low going into the report, and the disappointed even those.”

Shares of Groupon — down more than 80% from their IPO price a year ago — slid nearly 16% in after-hours trades to about $3.30 following the report. The stock closed the regular session up 4.3% at $3.92.

Mason said the company followed a “different playbook” with its European business than it did in North America. He said the company focused on grabbing market share in Europe, “at the cost of investing in technology and innovation, and too often the satisfaction of our merchants and customers.”

RBR-TVBR observation: GroupOn and LivingSocial customers are fair-weather deal scavengers, and businesses are starting to find that out. It should be interesting to see if the trend continues with Cumulus’ SweetJack (with Clear Channel stations on board, too via the iHeartRadio deal)—they have the advantage over the other sites of cross-promotional mentions and sales, both locally and nationally.