FILE - In this Sept. 22, 2011 file photo, the Groupon logo etched in glass is shown in the lobby of the online coupon company's Chicago offices. Groupon Inc., said Monday, Aug. 13, 2012, that its second-quarter earnings beat Wall Street's profit estimates, but it underwhelmed analysts with sales growth hurt by unfavorable currency movements. (AP Photo/Charles Rex Arbogast, File)
FILE - In this Sept. 22, 2011 file photo, the Groupon logo etched in glass is shown in the lobby of the online coupon company's Chicago offices. Groupon Inc., said Monday, Aug. 13, 2012, that its second-quarter earnings beat Wall Street's profit estimates, but it underwhelmed analysts with sales growth hurt by unfavorable currency movements. (AP Photo/Charles Rex Arbogast, File)
FILE - This Oct. 21, 2011 file photo shows the Groupon logo inside the online coupon company's offices, in Chicago. Groupon Inc., said Monday, Aug. 13, 2012, that its second-quarter earnings beat Wall Street's profit estimates, but it underwhelmed analysts with sales growth hurt by unfavorable currency movements. (AP Photo/Charles Rex Arbogast, File)
LOS ANGELES (AP) ? The weak European economy contributed to lower sales growth than expected at Groupon Inc., particularly for discretionary items such as laser hair removal and luxury hotel stays.
Although the online deals site beat Wall Street's profit estimates in the latest quarter, its stock tanked because of concerns about its growth prospects.
Groupon gets more than half of its revenue from outside of North America, and most of that comes from Europe, where economic worries are affecting sales. A weaker euro and U.K. pound also translate into fewer U.S. dollars.
Shares fell $1.53, or 20 percent, to $6.02 in after-hours trading after second-quarter results were announced Monday. That's down 70 percent from its initial public offering price of $20 per share in November.
Founded in November 2008, Groupon pioneered the online daily deals market, which offers subscribers deep discounts on everything from restaurant meals to tech gadgets to weekend getaways if enough people buy in. It sparked many copycats, including LivingSocial and Google Offers.
Groupon's net income in the three months to June 30 came to $28.4 million, or 4 cents per share, reversing a net loss of $107.4 million a year ago.
Excluding the cost of paying executives with stock, a gain on reorganizing a Chinese joint venture and other items, adjusted earnings came to 4 cents per share, beating the 3 cents expected by analysts polled by FactSet.
Groupon, which is based in Chicago, said it improved profitability by reducing the cost of acquiring customers by 43 percent, while increasing the number of active customers by 65 percent from a year ago to 38 million.
"We just got more efficient on marketing," Chief Financial Officer Jason Child said in an interview. "We dropped those efficiencies to the bottom line."
Although investors have been spooked in the past by how much Groupon spends to acquire new customers, its growth prospects took prominence this time.
Revenue rose 45 percent to $568.3 million, which was below the $574.8 million expected by analysts. Groupon says its revenue was $32.4 million lower because of unfavorable currency-exchange rates.
For the quarter through September, Groupon said it forecast revenue of $580 million to $620 million. The midpoint was below the $605.5 million expected by analysts.
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