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Groupon missed Wall Street’s top-line estimate and reported $568.3 million in revenue for the second quarter of 2012. The deals company, however, posted $46.5 million in operating income for a non-GAAP earnings per share profit of $0.04 in Q2 (excluding non-operating gains), which was $0.01 higher than anticipated.

Monday’s earnings report is Groupon’s third since debuting on the NASDAQ in November. Wall Street was anticipating $573.13 million in revenue and non-GAAP earnings per share of $0.03.

Though Groupon came in under estimates on the revenue front, the company was able to grow its revenue year-over-year by 45 percent for the quarter. Groupon grossed $1.29 billion in total billings (the total amount collected from sold Groupons), an increase of 38 percent year-over-year. The company, however, posted higher gross billings of $1.35 billion in Q1.

Groupon closed its second quarter with 38 million active customers, a 65 percent year-over-year increase. The company said that it featured deals from more than 100,000 unique merchants for the second straight quarter.

“We had a solid quarter despite challenges in Europe and continued investment in technology and infrastructure,” CEO Andrew Mason said in a statement. “We’ve deepened our relationships with a growing base of merchants and customers worldwide, demonstrating progress as we work to unlock the opportunity in local commerce.”

The deals provider did beat income expectations for the quarter with GAAP earnings per share of $0.04 and non-GAAP earnings per share of $0.08. The non-GAAP figure includes a $0.04 per share gain from non-operating items, the company said. So the big-looking income beat is actually a small one.

Notably, the $33 million net gain, which consisted of a $56 million non-operating gain and $23 million of tax expense, was the result of a tit-for-tat deal with competitor Life Media. Groupon exchanged a minority interest in its China operations and a cash investment for a minority interest in Life Media, also known as F-tuan.

The message Mason and CFO Jason Child conveyed to investors and analysts Monday afternoon in a post-report call was that Groupon Goods is growing and contributing substantially to the company’s bottom line. A quarter-over-quarter weakness in European markets, however, negatively affected its earnings. The company’s European challenges, a direct result of previously acquiring competitors for market share, will take some time to correct, the officers said.

Comparatively, the deals company had what seemed to be a very impressive first quarter. In Q1 2012, Groupon beat aggressive estimates and reported 89 percent year-over-year revenue growth, with $559.3 million in revenue. It also posted $39.6 million in operating income and non-GAAP earnings per share of $0.02 in Q1.

Some have suggested, however, that the methodology Groupon used to count revenue from its Groupon Goods product, a service that offers discounted prices on physical goods, may have made its business appear stronger than it actually is.

VentureBeat columnist Rocky Agrawal, who has various puts and wagers against Groupon, alleged that Groupon inflated its first quarter North American revenue by reporting gross revenue, or the entire amount paid by consumers, for Goods, instead of net revenue.

“Based on a better understanding of Groupon Goods accounting and the impact it may have had on the 1Q revenue growth rate, we are less sure the underlying 1Q revenue trends were in fact as strong as we had originally thought,” analyst Arvind Bhatia of brokerage firm Sterne Agee said in a report last week.

The firm lowered its financial estimates for Groupon and changed its rating from “buy” to “neutral,” citing slowing growth as its primary concern.

Groupon said that it expects to earn between $580 million and $620 million in revenue and make between $15 million and $35 million in income during the third quarter of 2012.

Groupon’s stock, which was trading in the mid $20s at the beginning of the year, has been pushed to new lows in recent months. The company’s share price was hit especially hard in March when it revised its fourth quarter earnings and was punished again in June when the lock-up period expired and insiders holding 600 million shares were allowed to trade their holdings.

In advance of today’s earnings release, shares closed up Friday at $7.44, and gained a bit more Monday to close at $7.55. The stock, however, is losing a lot of ground in after-hours trading and was trading down by around 13 percent at the time of this report.

GRPN Chart

GRPN data by YCharts

Photo credit: swanksalot/Flickr

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