RetailMeNot Struggles to Deliver

It is not just online discount coupon site Coupons.com that is seeing their stock price fall below their list price. Market leader RetailMeNot (Nasdaq: SALE) is not faring any better—its stock is trading well below its list price from July. Recently announced disappointing results have not helped the stock either.

RetailMeNot’s Financials
RetailMeNot may have been over-confident earlier last quarter when they said that changes made to Google’s Panda algorithm may not affect them. But recent results have shown quite the opposite.

While second quarter revenues grew 37% over the year to $59.5 million, they were short of the Street’s projections of $60.2 million. EPS of $0.08 was also shy of the market’s projections of $0.07 f0r the quarter.

During the quarter, RetailMeNot’s international revenues grew 57% to $13.5 million.

Among other operating metrics, net revenues from mobile devices grew 114% to $10.7 million and accounted for 18% of total revenues. They also saw subscribers to their newsletter grow by 98% to 22.9 million global subscribers. Total site visits grew 27% to 154.2 million as users tried to access more than 500,000 offers from over 50,000 retailers.

For the current quarter, RetailMeNot expects revenues of $53 million-$57 million, falling significantly short of the market’s projections of $62.6 million. They reduced their fiscal year revenue estimates lower from $276 million-$282 million to $262 million-$270 million, falling well below the Street’s target of $282 million.

RetailMeNot’s Mobile Focus
RetailMeNot remains focused on improving their mobile metrics. Not only does RetailMeNot hope to target the growing mobile demographics through these upgraded apps, but they are also helping them reduce their dependence on search engines like Google. They do not report the traffic volume that they get from Google. But, as of earlier this quarter, traffic from organic sources accounted for 64% of their traffic.

As of the end of June 2014, they had recorded 18.5 million downloads of their mobile apps globally, compared with 7.1 million a year ago. Mobile app sessions were significantly higher at 169.2 million compared with 26.5 million a year ago.

Earlier this week, they announced several upgrades to their iPhone and Android apps. The updated apps provide shoppers access to localized offers that are also personalized to their preferences. The apps feature improved navigation capabilities and an improved UI that lets them easily access offers in their vicinity. The biggest enhancement, though, was the personalization aspect that lets users access top offers for their favorite stores, find the best new deals of the day, and look at what offers are trending in the community.

They are also testing retailer-focused initiatives and recently opened their proprietary RetailMeNot AB test offer testing platform to a few retailers. Their testing platform will enable these retailers to understand the efficiency of an offer.

But the market is not impressed. Their stock is trading at $17.28 with a market capitalization of $932.7 million. It touched a 52-week high of $48.73 in February this year. It has recovered marginally from the low of $16.55 it had touched earlier this month.