American coupon giant RetailMeNot has reported a 39% year-on-year net revenue increase - to nearly $50 million.
The huge quarter-three sum rose to $47.4 million, from $34.2 million, in Q3 2012. The results also revealed that more than a third of its content was user-generated during this period.
In its international business, net revenues grew to $9.5 million, representing growth of 56% year-over-year. Mobile net revenues reached $5.8 million, up a whopping 190%, compared to $2 million.
RetailMeNot, which also owns UK-based business VoucherCodes.co.uk, among many other global coupon sites, also revealed a 19% year-over-year increase in visits, from 111.5 million to 132 million.
Founder and CEO, Cotter Cunningham said during the third quarter more than a third of its content came directly from its community of users – whereby members are asked to submit a new coupon to ‘help others save money’.
“The reliability and breadth of our offers has been a key differentiator for RetailMeNot and user-generated content has been an important part of our success,” Cunningham said.
Users can earn points, prizes and badges, climb a leader board and track how much they save for others, by submitting coupons online.
As the use of user-generated content can be a controversial one, due to the misuse of exclusive codes, among other associated bugbears, RetailMeNot users are told to only submit publicly available coupon codes and not private or internal company codes.
While it does say this in its terms and conditions, RetailMeNot does stress that it ‘cannot review all material made available through websites linked or linking to any part of the services’.
“We strive to ensure that all of our offers work and to-date, assessing the quality of the average spending inventory has been a very manual process,” Cunningham said.
A changing landscape
Other key Q3 highlights include 8.8 million global mobile app downloads, between RetailMeNot.com, VoucherCodes.co.uk and French site Bons-de-Reduction.com. This is up from just 2.3 million as of September 30, 2012.
During the third quarter, mobile app sessions totalled 46 million, compared to 3.5 million during the third quarter of 2012.
“Our mobile apps are playing a major role in deepening our direct engagement with customers in the third quarter,” Cunningham said.
He also stressed how the emergence of digital offers and a mindset of savings has changed the landscape dramatically.
“The role of digital marketing solutions in commerce, both online and offline is evolving rapidly,” Cunningham added.
“Businesses like ours are at the confluence of several significant trends, so we’re excited to have achieved our position as the world’s largest digital coupon market player.”
Research and discovery
During its Q3 announcement, the company’s chief financial officer, Douglas Jeffries, said the organic growth rate, which excludes the impact of acquisitions, was 35%.
Jeffries said the company believes many of its mobile web visits and mobile app sessions are for research and offer ‘discovery’, that then lead to transactions taking place on larger screen format such a tablets or desktops.
“Ultimately we believe the increased frequency of consumer interactions with our content made possible by mobile devices, will result in increased sales volume for our retailers and increased commission revenues for us,” he said.
While its websites and mobile products are showing strong consumer engagement metrics, Jeffries said the company is also continuing to see ‘strong demand’ for its email newsletters.
During the third quarter, worldwide subscribers to its emails increased to 13.9 million, up 81%.
Also during Q3, the company recruited 41 more employees, taking its total to 414 – which will rise to 450 by the end of the year.
IPO, investments and operating costs
As well as the completion of its IPO in July, just last month RetailMeNot also acquired ZenDeals, an early stage technology company with a patent pending proprietary digital coupon verification technology – the acquisition cost $18 million in an all cash transaction.
In terms of some of its operating costs during Q3, its product development expense for the quarter was $8.2 million, or 17% of net revenues, from $3.8 million, or 11% last year.
Sales and marketing expense was $15.7 million, or 33% of net revenues, compared to $9.4 million, or 28% last year.
For the fourth quarter RetailMeNot expects net revenues in the range of $66 million to $69 million, which equates to 33% growth at the midpoint.
For the full year it expects net revenues in the range of $197.4 million to $200.4 million, resulting in approximately 37% growth at the midpoint.
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