Groupon Narrows Its Loss After String of Disappointing Results

The company also reported that its net loss in the first quarter narrowed from a year earlier.

Shares of Groupon jumped 10.6 percent, or 59 cents, to $6.18 in after-hours trading.

Groupon said its first-quarter revenue rose 7.5 percent, to $601.4 million, from $559.3 million a year earlier. Groupon was expected to generate revenue of $590 million, according to analysts surveyed by Thomson Reuters.

The company posted a net loss of $4 million, or 1 cent a share, in the latest quarter, compared with a net loss of $11.7 million, or 2 cents a share, a year earlier.

Consolidated segment operating income, a closely watched measure of Groupon’s profitability, came in at $51.2 million in the latest period. Mark Mahaney, an analyst at RBC Capital Markets, was expecting this figure to be about $26 million.

Groupon’s North American revenue jumped 42 percent, while international revenue fell 18 percent.

“Revenues were slightly better than expected, with North America growth a lot better, while international is definitely still slower,” said Aaron Kessler, an analyst at Raymond James.

The company, one of the most celebrated Internet market debutantes of 2011, fired Andrew Mason, its co-founder and chief executive, in February after a string of disappointing results wiped out three-quarters of its market value. Groupon, which has lost several other key executives, is seeking a new permanent chief executive.

Ted Leonsis, the company’s interim co-chief executive, said on Wednesday that Groupon’s board had formed a special committee that had begun a search for a new chief.

Groupon’s current leadership team is “gelling very very nicely,” giving the search committee more time to find “the ideal long-term C.E.O.,” Mr. Leonsis said in a conference call with analysts and investors.

Groupon shares hit a record low late last year, but have rallied strongly since then, partly because Tiger Global, a top technology-focused hedge fund firm, took a stake of about 10 percent in the company.

Under Mr. Leonsis, and his counterpart, Eric Lefkofsky, Groupon is trying to turn around its struggling European business, while continuing to expand in the United States. Analysts expect a slimmed-down company under the new leadership.

You're the Boss Blog: A Web Site for Cheaters Says Groupon Cheated

This week’s dashboard roundup of small-business news includes a link to an article about how Groupon, the daily deal site, called off a deal with Ashley Madison, a dating service for people who are married but looking (“Life is short. Have an affair”). We spoke with Noel Biderman, who founded Ashley Madison in Toronto and is chief executive of its parent company, about the challenges of running a controversial business. A condensed version of the conversation follows.

So what happened with Groupon?

Groupon is a public company. They went public on the basis that they would provide discount offers to their customers for high-demand products. That is clearly my product. AshleyMadison.com has 16 million members across the globe in 26 different countries. With Groupon, more than 90 people signed up for our deal in the first hour. I’m upset because Groupon then made a moral judgment to the detriment of their customers and shareholders without full justification.

Do you feel frustrated that people don’t get it?

I’m frustrated when sophisticated people don’t get it. I understand when someone of faith or religion feels this way, and I don’t even want to persuade them. I don’t get frustrated with people that don’t like my services. The unfaithful are sitting presidents, favored athletes, popular actors and our friends and neighbors. We have to stop painting people with scarlet letters. People like me who build a business that’s totally legal need to be given daylight.

Are you married?

I am a married man. I have two children – a 7-year-old son and 4-year-old daughter.

Before you entered this business did you talk about this with your wife, and did she give you her blessing?

Well, blessing may be a strong word. What she first wanted to understand was whether we were going through some kind of a personal crisis. Once I assured her it wasn’t, and that it really was a massive opportunity because people were behaving like this using dating sites to have affairs and that it was an opportunity for me to capitalize, she said absolutely. Ten years later, I think I was right.

That’s all very nice, but if you weren’t doing as well as you are, would your wife and family still be behind you?

[Laughs.] No, you have a partnership when you’re married, and you take on roles and responsibilities. My wife is the C.E.O. of our home. If we couldn’t live where we wanted and drive what we wanted and vacation where we wanted, she would say, “You seem like a bright guy, Noel. Couldn’t you do something else?”

How do people in your community treat you?

I’m Canadian. I’ve created one of the most successful digital companies that has ever come out of Canada. Locally, I’m pretty well respected as an entrepreneur employing hundreds of Canadians. Among my own community, I will be judged by who I am as a parent, sibling, husband, father, son and neighbor. Ironically, AshleyMadison.com has seemed to have made me more popular. I’m now invited to more parties, and I’m often the centerpiece of many conversations!

How important have the media been to the success of your business?

I could have chosen to not speak to the media. But I believe that entrepreneurs move a society forward. Controversy has landed me on shows from Howard Stern to Sean Hannity, and people like being around controversy. I don’t want to say the Stern show was everything from a marketing perspective, but without that partnership in 2007 our success may have taken forever, if at all. Our recognition and our branding is due in huge parts to Howard Stern. I have spent millions of dollars with Sirius radio and created a great partnership that’s worked for everyone. We wouldn’t be AshleyMadison.com if it weren’t for that partnership.

Have you ever been physically threatened?

Yes. I’ve been physically threatened, and I’ve received death threats. I’ve had to hire security in the past.

If someone in your neighborhood opened up a controversial business — a porn shop or a gun store or an abortion clinic — what would be your reaction?

Depending on the business, I wouldn’t patronize it. I would choose to vote with my dollars. I wouldn’t protest.

Did you go into this business for the passion or the money?

I was a former sports attorney and law was my passion business. I was doing my dream job. But the dot-com allure was big for me. At its genesis, it was an economics-only decision. Did it become more of a passion? Yes.

Did you have difficulty raising capital?

Yes. I knew I would have to go to trusted, close-knit people. Banks and traditional investors wouldn’t put their money into this. I found that people would invest in me, not necessarily the concept. I put up a million dollars for half of the company and received another million from other partners.

Are you taken seriously by people in the business community?

I think so. To my face, I’m treated with respect 100 percent of the time. But when I’m not in the room, I’m not sure. I know that people say a lot of not-nice things about me. I’ve had to deflate notions. So many people have said to me, “Oh, this is such an easy business,” and “Anyone could have done this,” but I have to fight for every eyeball I get, every customer I bring in. This business clearly has its unique challenges. I think, for the most part, sophisticated investors would back another Noel Biderman venture should I choose to do one in the future.

Are you considering another venture?

I’m 40 years old, and I don’t feel my work is done here. We recently expanded throughout South America and now want to look across to Asia. Every society I know has a high degree of documented infidelity, and I feel that I can be just as successful in Tokyo as Tallahassee. I want to complete that effort. I’m not superfunded. I do it on profitability. One country at a time.

What’s been your biggest surprise?

I didn’t realize how valuable my data would become. Researchers at N.Y.U. and the University of Toronto and Glasgow University are using it to do studies. I also didn’t realize how much this business would need public defending. I didn’t intend to be the face of this business.

Gene Marks owns the Marks Group, a Bala Cynwyd, Pa., consulting firm that helps clients with customer relationship management. You can follow him on Twitter.