RetailMeNot’s Growing Competition

eMarketer estimates the online coupon industry to be worth $4 billion annually. The research firm also estimates that the number of people redeeming digital coupons will grow to 100.1 million this year, compared with 92.5 million in 2012. The use of mobile devices to access coupons is also rising and is projected to grow to 53.2 million this year, compared with 12.3 million in 2010.

RetailMeNot’s Financials
Online couponing giant, RetailMeNot (Nasdaq: SALE), which went public last summer, recently announced impressive fourth quarter results. Fourth quarter revenue grew 55% over the year to $78.5 million with EPS growing from $0.03 a year ago to $0.26. As with the rest of the industry, mobile revenues remain small, but are gaining steam. They increased 179% to $4.2 million. RetailMeNot’s international efforts are delivering good results and revenues from these markets increased 85% to $16.3 million.

Among other statistics, visits to their website increased 24% to 184.1 million and net revenues per visit grew 25% to $0.426. They ended the year with 17.1 million global subscribers to their newsletter or store alert system.

They ended the year with revenue of $209.8 million, recording a 45% growth. EPS grew from $0.03 a year ago to $0.23 for 2013.

For the current quarter, the company projected revenues of $54 million-$56 million and an EBITDA of $17 million-$19 million. They expect to end the year with revenue of $262 million-$270 million with an EBITDA of $96 million-$103 million.

RetailMeNot’s Mobile Focus

RetailMeNot continued to invest in website and mobile app upgrades. Earlier last year, they released the upgraded version for their Android and iOS app. The release 3.0 now comes with features that enable their customers’ desktop accounts to be synchronized between devices. The users can now share coupons and bookmark favorite stores for faster access to digital coupons. The app is also designed better to enable improved navigation and updates to the user interface that highlight retailers, favorite stores and leading coupons. Their mobile efforts have stood them in good stead. At the end of the year, their mobile apps had recorded more than 13.7 million downloads compared with 4.5 million downloads a year ago. During the quarter, mobile app sessions grew to 116.5 million from 16.7 million in the fourth quarter of 2012.

Meanwhile, competition for RetailMeNot is getting strong. Recently, several leading tech sites have entered into the digital coupons segment. Some of the new entrants include daily deals sites, Groupon and LivingSocial, both of which entered into the digital coupons segment to expand their offering base. RetailMeNot may not be worried due to their current relationship with a big retail base. More than 35,000 retail store locations were using their in-store mobile solutions platform during the last quarter. But the company cannot escape from the fact that Groupon boasts of a bigger mobile footprint.

Their stock is trading at $41.96 with a market capitalization of $2.13 billion. It touched a high of $43.60 earlier last week. The stock had listed last July at a list price of $21.00 per share.