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May 9, 2018, 4:47 p.m. EDT

CEO sees coupon-free Groupon+ offers morphing into modern-day loyalty program

Groupon shares rally after earnings; Chicago-based online discount company had 49.6 million active accounts at the end of March

By Emily Bary

Bloomberg News

Groupon Inc. continues to see momentum for its coupon-free offering, which the company sees as the beginnings of a capacity to merge discounts and payments.

Shares of Groupon closed up 0.8% in Wednesday trading after the online discount company (NAS:GRPN) reported better-than-expected earnings and revenue for its latest quarter. Among the highlights was the company’s Groupon+ program, which lets users link credit cards to their accounts and then get discounts in the form of refunds without having to present a physical coupon. Groupon said that more than a million new customers joined the program in the quarter.

Groupon Chief Executive Rich Williams told MarketWatch that the company’s main focus with Groupon+ right now is getting consumers to adopt the product, which launched last fall. Going forward, Williams is optimistic about what the company can do with the Groupon+ platform, which connects offers with the ability to pay for things in real time.

/zigman2/quotes/207356672/composite GRPN 16.92, +0.73, +4.51%

“We see the world of offers and payments really colliding here in the relative near term, and we’re nicely positioned,” Williams said.

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Groupon is billing Groupon+ as a modern-day loyalty program for restaurants that lets them reward frequent diners. Currently Groupon+ allows restaurants to give higher discounts upfront and then smaller discounts thereafter, but Williams said it would “absolutely” be possible for the program to operate in a way that gives diners something free after they make a certain number of visits. He sees the program as a “punch card without the punch card” that could help establishments enhance their loyalty programs.

The company is also integrating booking and ordering within the platform, through partnerships with Live Nation Entertainment Inc. (NYS:LYV) and GrubHub Inc. (NYS:GRUB) .

“Groupon’s expansion of Groupon+ and bookable options is preparing it well to extend its own supply into other third party platforms to better monetize its relationships with merchants,” wrote Piper Jaffray analyst Sam Kemp, who has an overweight rating and $6.25 price target on the stock.

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Other elements of Groupon’s business showed momentum as well during the quarter, including international markets, where the company added 300,000 active customers. The company also grew its active-customer base in North America and saw a small uptick in the amount of gross profit it generated per active customer there, which Williams labeled a key priority. Groupon had 49.6 million active customers in total as of the end of the quarter. That metric includes all users who have made a purchase on the platform over the preceding year.

Groupon raised its full-year outlook for adjusted earnings before interest, taxes, depreciation and amortization, or Ebitda, to between $280 million and $290 million. The company has previously been expecting $260 million to $270 million in Ebitda, and analysts had been forecasting $263 million.

Shares of Groupon are up 42% over the past 12 months, while the S&P 500 (S&P:SPX) has gained 12%.

Link to MarketWatch's Slice.