Groupon Q4 off to steady start: Yipit

NEW YORK, USA: Groupon Inc's fourth quarter got off to a strong start in October as the largest daily deal company's growth outpaced that of its closest rival, LivingSocial, industry data tracker Yipit said on Thursday.

Groupon's gross billings totaled $176 million in October, up 22 per cent from the previous month, Yipit said.

LivingSocial gross billings totaled $54.9 million in October, down 8 per cent from September.

The previous month was boosted by a national deal LivingSocial did with Whole Foods Market. Excluding that, LivingSocial's gross billings would have grown 11 percent in October from the previous month, Yipit reported.

Groupon's growth in October was mainly driven by its new travel business, Groupon Getaways, which offers discount travel deals with Expedia Inc.

Groupon Getaways generated gross billings of $22 million in October, up from $8.6 million in September, Yipit estimated.

While travel offers have been a new source of growth for Groupon, the business has lower profit margins than the company's main daily deals business.

When Groupon runs local deals with merchants, the company typically keeps about 40 per cent to 45 per cent of the money generated by the offers, which is known as the take rate.

In contrast, the travel business has margins in the mid 20 per cent range, Chief Financial Officer Jason Child said during a presentation to investors on Wednesday.

Another new Groupon business, called Groupon Goods, has margins below 20 per cent, he added.

These new businesses have pressured Groupon's overall take rate, a closely watched measure. However, Child said the take rate of the company's main daily deals business has stayed steady at around 40 per cent to 45 per cent.